Hong Kong home prices rose for the first time in almost a year in March as the city’s removal of property curbs revived sales.

The price index for private domestic homes increased by 1.06% from February, after declining for 10 months straight, according to the Rating and Valuation Department. 

The figure reflects the performance of the property market in the first full month since the government cut levies on home purchases in late February. Yet analysts doubt whether the rebound will be sustained as developers try to offload excess inventories at a time when high borrowing costs continue to weigh on demand. 

There are 20,000 completed but unsold apartments in the city, along with 71,000 unsold units that are under construction - both record highs, according to Hannah Jeong, head of valuation and advisory services for Hong Kong at Colliers International Group Inc. 

The oversupply will lead “to a downward adjustment of pricing by developers to clear inventory,” Jeong said in a statement. “This will give pressure to the second-hand market, further slowing down the transactions.” 

The prospect of higher-for-longer interest rates is also likely to weigh on the market. Home prices may fall a further 5% to 10% this year if the US Federal Reserve’s rate cuts miss expectations, Jeong added.

  - Bloomberg