Hong Kong housing rally faces test as property flippers retreat

Secondary home prices are the highest in three years, but July short-term trading of those held for less than a year was half the level seen in March

Hong Kong’s housing rally faces a new test as investors who rode the first-half rebound become less active in quick-turn trades, leaving owner-occupiers and longer-term buyers to sustain the recovery.

Secondary home prices have continued to rise, with Centaline’s leading index climbing 0.64 per cent to 162.16 on Friday, its highest level in three years.

But the short-term trading that accelerated alongside the rebound has pulled back sharply: transactions involving homes held for less than a year fell to 99 in July, down 24 per cent from June. In March, 202 such transactions were recorded.

Despite the decline in transactions, Centaline said the average profit per sale rose almost 10 per cent in July to HK$842,000 (US$107,400), the highest monthly average this year.

The divergence points to a market in which the gains from the first leg of the recovery have become harder to repeat through quick trades.

“Buyers are resisting chasing higher prices as rate expectations shift,” said Louis Chan Wing-kit, Asia-Pacific vice-chairman and chief executive of Centaline’s residential division.

Developers were also launching new projects at prices close to those in the secondary market, giving buyers another option and drawing some investors and short-term traders towards first-hand homes, Chan said.