Homebuyers on Saturday snapped up flats put on the market at Sun Hung Kai Properties’ (SHKP) University Hill project in Tai Po, highlighting a much improved economic sentiment among homebuyers concerning the city’s battered property market.

As of 5.30pm, 159 of the 160 units available in open sale had found a buyer, agents said. Another 23 units were available via tender.

The sale comes a day after preliminary figures released by the Hong Kong government showed that the city’s economy expanded 2.7 per cent in the first three months of the year, ending a recession following four straight quarters of decline owing to the devastating impact of the coronavirus and the corresponding government restrictions.

“The latest batch of flats in the project is likely to be sold out today,” said Sammy Po Siu-ming, CEO of Midland Realty’s residential division for Hong Kong and Macau.

The continued interest in the latest project of Hong Kong’s largest developer by market value reflected investors’ bet on rising rents, according to Louis Chan Wing-kit, CEO of the residential division at Centaline Property Agency.

“With a better economy and the Quality Migrant Admission Scheme by the government, buyers are anticipating an improvement in the rental market,” he said. “Some investors are interested to buy for long-term investment.”

In December, the government launched a talent scheme intended to revitalise the city’s stature as Asia’s premier financial hub, following three challenging years marked by unprecedented social unrest in 2019 and the Covid-19 pandemic that followed.

The city offered a slew of incentives to lure talent such as a refund of the extra stamp duty that non-locals pay when buying residential properties, as long as they remain in Hong Kong for seven years and obtain permanent residence.

The first two batches of flats – 341 units in total – at the project put on offer by SHKP were sold out on the days of their launch in late April and earlier this month.

For this round, the 160 flats on offer ranged in size from 218 sq ft to 571 sq ft, with prices between HK$3.3 million and HK$10.1 million. The developer also offered potential buyers discounts as high as 15 per cent.

“For the first-hand market, the developers are providing a reasonable discount at this moment in order to clear up their stock and enhance their balance sheet and recover their loss from the commercial properties,” said Hannah Jeong, head of valuation and advisory service at Colliers Hong Kong.

The city’s property market has been showing signs of an upswing. The Rating and Valuation Department’s home price index, a gauge of lived-in home prices in the city, climbed 1.35 per cent to 351.4 in March, the highest since 360.3 in September. It was the third straight monthly increase, with gains in Hong Kong’s secondary market adding up to about 5 per cent for the year.

The improved market comes even after the Hong Kong Monetary Authority (HKMA) raised its base rate to a 15-year high earlier this month in lockstep with the US Federal Reserve’s latest round of policy tightening to curb inflation.

HSBC, the city’s biggest commercial lender, increased its best lending rate in the city by 12.5 basis points to 5.75 per cent following the HKMA’s decision, a move that was followed by some of its peers, including Bank of East Asia.

The increase will add HK$347, or 1.6 per cent, to HK$22,452 in monthly instalments on a typical HK$5 million, 30-year home loan, according to mReferral, a local mortgage broker.

“Compared with the secondary market, the primary market is affected less as some developers provide financial incentives and own mortgage plans for buyers,” said Martin Wong, director and head of research and consultancy for Greater China at Knight Frank.

“Primary residential transactions will remain robust in the coming months, while the secondary transaction would be reduced accordingly,” he added. “Part of the purchasing power will divert from the primary to the secondary market.”