Mass-housing flats forecast to cost 30pc more by end of 2008

Prices of mass-housing units in Hong Kong will rise about 30 per cent by the end of next year, say stock analysts, who cite cheap mortgages and growing inflation as triggers for home seekers to rush into the market.

They said the market had also been supported by steady economic growth, a falling unemployment rate and an improving job market.

JP Morgan expects home prices to rise 10 to 15 per cent for each of the next two years, while UBS predicts that their capital values could jump as much as 33 per cent by the end next year.

Bear Stearns believes the values of medium-sized flats will rise 30 per cent between now and the end of next year.

Their views echoed predictions made earlier by real estate agents that home prices would jump 20 to 25 per cent in the next six to 12 months. Mass-home prices have risen about 7 per cent this year, according to Centaline Property Agency.

Bigger pay increases, record low supplies, cheap mortgages and fund flows from the mainland combined to push up home prices, UBS analyst Eric Wong said yesterday.

Midland Realty chief analyst Buggle Lau Ka-fai said that with interest rates likely to fall in line with US rates and inflation set for faster than expected increases, more home seekers would prefer to buy into real estate to sustain their wealth. The government has raised its full-year forecast for inflation in Hong Kong to as high as 2 per cent from 1.5 per cent.