Hong Kong's economic rebound has lifted hopes the territory's beleagured property sector is finally on the mend after enduring six years of misery since the Asian financial crisis in 1997.
However, analysts and property agents remain cautious of the sustainability of the nascent recovery in prices and warn the upturn is heavily dependant on the continued recovery of the local economy after the devastating SARS crisis earlier this year.
Total property deals in Hong Kong surged 63.4 percent in October compared to September and 64.8 percent from a year earlier, the Land Registry said Monday.
By value, sales totaled HK$32.1 billion (US$4.12 billion), up 131.5 percent from September and up 138.2 percent compared with October last year.
Analysts described the improved figures as a strong turnaround for the long-suffering property sector.
Centaline Property senior research manager Wong Leung-sing said the improved transaction figures for October were a strong sign the local market was "on the way back."
Wong forecast that total transactions for the year would hit 85,900, the same level as last year, but sales activity would weaken a little in November and December.
The government has been under pressure to prop up the ailing property sector, one of the pillars of the local economy, in recent years.
Last month, the government implemented a series of measures in a bid to help the sector recover from a prolonged slide which has seen residential prices plunge about 70 percent since the 1997 to 1998 Asian financial crisis.
Chief Executive Tung Chee-hwa has also introduced a plan to attract overseas buyers by offering the prospect of residency in the wealthy territory.
Chief analyst at property agent Midland Realty, Buggle Lau, said the rise in property transactions in September was "one of the most significant rebounds in the past few years."
The estate agent estimated there were more than 4,000 sales of new units last month while second hand unit sales hit 5,492, a rise of 44 percent from a month earlier.
However, Lau warned that although the number of transactions was the highest since 1999, figures for November would likely decrease slightly.
"The primary reason for this is that as property sellers aggressively hike prices as the economy improves, this will initially put off prospective buyers from chasing up prices. The result is that transactions will drop about 10 percent next month," he said.
However, this was likely to be a temporary lull with the brighter economic outlook expected to lure sceptical buyers back to the market by December, he said.
Standard & Poor's credit analyst Renee Lam said the key to recovery was sustained rising demand.
"Developers will be in a position to sell more apartments as a result of an improvement in market sentiment. However, this does not necessarily mean that there will be a significant rise in property prices," she said.
She warned abundant supply in the primary market, deflationary pressures and a difficult job market, with unemployment still at 8.3 percent after hitting a record high of 8.7 percent in July, would restrict demand.