Upscale residential developments like this one, next to the world-class Mission Hills Golf Resort in neighboring Shenzhen, are popular targets for Hong Kong homebuyers nowadays.? Bloomberg News

HONG KONG: Property purchases by Hong Kong residents on the mainland surged 23 percent in the first half of the year compared with a year ago, according to a survey by real estate consulting firm Land Power International Holdings Ltd.

Mainland residential units snapped up by Hong Kong residents during the period totaled 11,100 to 12,100, up 23 percent from the same period last year, the survey indicated.

The amount invested by Hong Kong residents in mainland properties during the period, meanwhile, totaled 9.2 billion yuan, up also about 23 percent from a year earlier.

Homebuyers and property investors' confidence in the mainland property market has been successfully restored after the central government implemented measures to boost domestic consumption following the onset of the global financial crisis in September, the consulting firm said.

The positive measures, which include rate cuts, easier mortgage terms for second homes and easier credit policy towards developers, triggered a sharp rally in property prices, which in turn attracted more buyers, analysts said.

During the first half, property prices on the mainland rose sharply, with prices in nearby Shenzhen surging 30-35 percent from a year ago and prices in Guangzhou climbing 20 percent.

The sharp rally also came after a year-long slump in the property market after the central government implemented stringent macro-adjustment measures in 2007 to suppress the then overheating market and after the financial crisis erupted in the second half last year.

Key cities in Guangdong province, including Shenzhen and Guangzhou as well as eastern coastal city Shanghai, remain the most-favored locations for Hong Kong buyers to purchase a second home away from their residences in Hong Kong, the Land Power survey showed (see table).

The Guangdong provincial government's move in March to repeal a policy that banned overseas buyers from buying a second home in the province contributed partly to the sharp rise in Hong Kong buyers' home purchases in the province in the first half, Land Power said.

The firm forecasts that home purchases by Hong Kong residents on the mainland this year will likely reach 21,200-22,200 units, up 39 percent.

Michael Choi, chairman of Land Power, expects the mainland property market to remain robust through the end of the year, with residential property prices likely rising another 5-10 percent in Pearl River Delta cities, as well as in Shanghai, Shenzhen and Guangzhou.

He played down concerns about news that municipal governments in some mainland cities were tightening their mortgage terms on second homes.

Authorities on the mainland are unlikely to severely tighten the second-home mortgage policy, because the central government wants to maintain healthy growth in the property sector to help boost economic growth, he explained.

(HK Edition 07/29/2009 page4)