HONG KONG (Reuters) - Hong Kong's private home prices rose for the fifth straight month in May to a record high, but the pace slowed from the previous month on caution over Sino-U.S. trade tensions and social unrest at home.
Home prices in May rose 1.4% from a month earlier compared with April's revised 3.2% increase, government data showed on Friday. April's pace of growth was the fastest since February 2013.
The price index of 396.8 last month topped 394.8 in July last year to become the highest on record in one of the world's least affordable property markets.
Market participants expect more volatility in the second half of the year.
"The property market has performed well in the first half...recording around 9% gains," said Thomas Lam, executive director of Knight Frank. "But the recent social movement in Hong Kong and the China-U.S. relations will definitely affect prices in the second half."
Lam expected a correction of 5% for the rest of 2019, registering a flat to small rise for the full year. He also revised down the valuation of land parcels to be sold by the government by 5%.
The former British colony is being rocked by a series of protests this month against an extradition bill that would allow people to be sent to mainland China for trial
Millions of protesters have thronged the streets in the past three weeks to demand that the now-suspended bill be scrapped altogether, and more demonstrations are set to take place.
Some Hong Kong tycoons have started moving personal wealth offshore amid concerns over the legislation.
Earlier this month, Hong Kong-based Goldin Financial Holdings Ltd (HK:0530) dropped out of a process to buy a commercial land parcel worth about $1.4 billion, citing "recent social contradiction and economic instability".
The protests have also prompted the government to delay the sale of a residential land parcel in the same district by one week. The parcel was sold on Wednesday for HK$12.9 billion ($1.65 billion), at the mid-to-lower end of expectations, to China Resources Land (HK:1109) and Poly Property Group (HK:0119), both Chinese developers.
In May, a flat of 60 square meters (646 square ft) on Hong Kong Island cost an average of HK$11.3 million ($1.45 million), according to official data.
Over the past decade, ultra low interest rates, limited housing supply and large capital flows from mainland Chinese buyers have pushed housing prices up more than 200 percent.
For the first six months, sales of primary homes recorded the highest volume in 15 years, while sales value was at the second-highest level on record, according to realtor Centaline data.
Co-Chairman of RK Properties, a unit of Road King Infrastructure (HK:1098) Derek Zen, told reporters this week the expectation of lower interest rates and strong housing demand in the city would lend price support and he expects a 5 percent rise for the full year.
($1 = 7.8116 Hong Kong dollars)