Used home prices surge

Price increase is the largest in two years.

Fueling the buying frenzy was a government-subsidized housing project at Greenview Villa, said property broker Centaline Property Agency Ltd. The Centaline City Leading Index rose 2.11% in the week ended Jan. 20, the largest seven-day gain since the period ended Feb. 13, 2011.

Greenview Villa, located at Tsing Yi district, drew about 58,300 orders for its 988 units when application closed Jan. 18. The project is part of Chief Executive Leung Chun-ying’s plan to increase housing supply after home prices in the city doubled in four years.

“When people see reaction like this, of course everyone would want to jump into the market,” said Wong Leung-sing, an associate director at Centaline.

“The plan itself wasn’t a bad idea but the timing was. If you are trying to cool sentiment you shouldn’t put this out on the market. It’ll only create the perception that the market is still hot.”

The government said it will buy land or re-zone land to build 75,000 public homes in the next five years. The private sector might sell 67,00 homes in the next three to four years. The total of 142,000 compares with the 124,000 built in the previous five years.