But price increases are already decelerating.
The continued boom in Hong Kong's housing market is increasingly unsustainable, and sentiment can turn very quickly when house prices start to cool. According to Hong Kong's Rating and Valuation Department (RVD), the increases in residential property prices have started to trend lower on a m-o-m basis, decelerating to 0.1% in July from a high of 2.7% in April. On a y-o-y basis, price gains are still strong at 19.6% in July, but are showing signs of peaking.
BMI Research said houses in the Special Administrative Region (SAR) are highly overvalued and are becoming even less affordable as property prices hit record highs, and housing remains well out of reach for a significant proportion of Hong Kong citizens. According to Demographia's 13th International Housing Affordability Survey, median house prices in the territory were 18.1 years of median household income in 2016, and have worsened over the course of 2017.
"As housing affordability worsened over the past decade, there has been a softening trend in the amount of take-up in the private sector. According to data from the Hong Kong RVD, take-up in private housing fell to an average of 11,655 units per year from 2006 to 2016 from 21,151 units per year from 1995 to 2005, and there is room for a further decline over the coming years," added BMI Research.
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