Hong Kong home prices hit record high for second straight month

HONG KONG Thu Aug 7, 2014 4:40am EDT

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HONG KONG Aug 7 (Reuters) - Hong Kong's home prices hit a record high for a second consecutive month in June, official data showed, with small and medium-sized units posting the biggest gains as pent-up demand from end-users boosts sales in one of the world's most expensive property markets.

An index of overall private home prices for June edged up 1.1 percent month-on-month to 249.8, a third consecutive month of gains and another record high after May. Home prices have risen 2.1 percent this year, according to government data.

Analysts said strong pent-up demand from end-users, who are exempt from a series of cooling measures to rein in sky-high prices, is heating up the once-quiet market, with several industry watchers turning more bullish on the sector and raising their forecasts for home prices in 2014.

The data came one day after the city's largest developer, Sun Hung Kai Properties, offered a new project on the city's prestigious Victoria Peak, with one unit going for HK176,000 ($22,707) per square foot, which would be the world's most expensive property, according to local media reports.

The city's powerful developers, including billionaire Li Ka-shing's Cheung Kong (Holdings) Ltd and Hang Lung Properties, have seen their earnings rebound in the first half thanks to robust demand.

Industry watchers said the improved sentiment came after the government slightly eased property curbs in May to give residents who wish to upgrade more time to sell their old homes, while some attribute it to recent capital market activity.

The city's real estate sub-index has risen more than 23 percent since lows hit in March and is now hovering near its highest level since September last year.

In late 2009, the government of the former British colony unveiled the first of a series of measures to cool one of the world's most expensive real estate markets.

Hong Kong home prices have surged more than 120 percent since 2008 due to low interest rates, supply shortage and flush liquidity.

(Reporting By Yimou Lee; Editing by Anne Marie Roantree and Simon Cameron-Moore)