8 January 2015 - The latest Centa-City Leading Index concluded the year of 2014 with an annual rise of 11.2%, reaching another record high of 132.45. The continuous upward climb of property prices throughout the year, though at a slower pace, has again alarmed investors and raised concerns of a potential bubble in 2015.

 

Home prices rose 7 consecutive months last year, according to data from The Rating and Valuation Department. In terms of property size, small and medium sized units led overall growth while prices of larger units remained stable.

 

Many anticipate that Hong Kong home prices will fall in 2015 given the expected rise in interest rate, increased home supply and a declining affordability ratio. On the contrary, Citi Research predict an upside potential of 8%.

 

“We normally take the affordability index as an indicator of asset bubble levels, but whether bubbles will burst depends on other factors, including the pace of mortgage rate rises, salary growth, demand/supply outlook, unemployment and so on,” stated a Citi Research report released this Tuesday. It explained that other factors have remained favourable, and that interest rates will likely rise slowly at first before getting higher next year.