JUST three months after Hong Kong rolled out a tough new round of property cooling measures, home prices have again climbed to record highs with demand unusually strong for new flats over the normally quiet Chinese New Year holiday break.
Hong Kong officials have stressed repeatedly that reining in the city's property market, now one of the world's most expensive, is a policy priority to restore affordability and to mitigate a major threat to the economy of the affluent Asian financial hub.
After five previous rounds of efforts to curb prices since October 2009, including a 15 per cent property tax on foreign buyers, mortgage restrictions and quick resale taxes, the home-price juggernaut rolls on and the challenge remains enormous.
"The overheating property market remains the biggest risk factor to the stability of the Hong Kong economy," said Norman Chan, head of the Hong Kong Monetary Authority, the city's de facto central bank, who added that household debt was now at 59 per cent, close to a record high of 60 per cent in 2002.
Property prices per square foot now exceed HK$10,000 (RM4,030) even in drab, unglamorous districts, such as Taikoo Shing on Hong Kong Island, where thousands of 700 square-foot units sell for more than US$1 million (RM3.1 million) a piece, more than a large cottage in Provence, France, a 2,700 sq ft bungalow in Hawaii, or a 1,300 sq ft flat on Manhattan's Upper West Side.
With affordability reduced in a city with a monthly median household income of about HK$20,000 and one of the widest wealth gaps in Asia, anxiety has grown among its seven million residents.
That anxiety, however, didn't stop buyers flocking to newly built units at Sun Hung Kai Properties' Residence 88 in a far-flung district close to the border with China, snapping up 150 of the 352 units over three days at an average price of some HK$8,000 per square foot.
"Sun Hung Kai was testing the market," said property research analyst Wong Leung-sing with Centaline Property.
"People still want to buy flats. The desire is strong. They don't think the market will fall."
The upcoming annual budget presentation by Hong Kong's financial secretary could, however, see a fresh round of market curbs that would likely face opposition from Hong Kong's powerful big five developers.
Together these giants - Cheung Kong (Holdings) Ltd, Sun Hung Kai Properties Ltd, Henderson Land Development Co Ltd, New World Development Co Ltd and Sino Land Co Ltd - control around 90 per cent of new property sales. Reuters