The first land auction since last November has just taken place in Hong Kong and raised amounts close to the highest estimates of analysts. This indicates that developers are still confident that the market can withstand any attempts by the government to control property prices.
A plot of land in the Hung Hom district which is near to the site of the former airport was bought by Nan Fung Development Ltd and Wing Tai Properties Ltd for HK$1.525 billion. Five surveyors and analysts had estimated this site would raise anything from HK$1.07 billion to HK$1.53 billion.
The site will be jointly developed and it's estimated the whole project will cost between HK$500 million and HK$600 million to build over 100 three and four-bedroom luxury apartments. The price paid for the site equates to HK$9934 a square foot while the estimated selling price will be HK$12,934 per square foot.
Property prices in Hong Kong have risen by 65% in the past two years, and the government has been trying to control this rapid rise since last year and hopes that boosting land supply will lead to more affordable housing, since many of the public have complained that housing costs are now unaffordable. Property prices rose 0.6% to the week ending April 17 after a 1.6% decline in mid-March after mortgage terms increased.
Prices of homes have increased by around 10% since last November. The government is selling a total of nine sites in the second quarter of this year which will enable 2650 apartments to be built. It could auction 52 sites this year which would mean 16,000 homes could be built. This would be an increase of nearly 80% on the number of homes built on government sold land last year.
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