HK home sales falling amid fears of a bubble
Home sales continued to fall last week and are expected to drop further as sentiment among homebuyers sags because of the European debt crisis and government warnings about rising risks of a property bubble forming in Hong Kong.
A total of 167 pre-occupied flats were sold in the 50 largest estates in Hong Kong during the week ended May 27 - down 16 per cent from the 199 sales recorded in the previous week, according to data from real estate agency Ricacorp Properties.
'The market is clouded by negative news, such as the uncertain situation about the European debt crisis and the government's warnings over the possible overheating of the property market,' said Ricacorp director David Chan.
In comments posted on his official blog on Sunday, Financial Secretary John Tsang Chun-wah reiterated an earlier warning to homebuyers to be cautious, as the property market, he said, was presently sandwiched between 'ice and fire' and risks were steadily growing.
The comments come about a week after Government Economist Helen Chan said local property prices had defied a slowdown in other economic indicators to rise by about 5 per cent in the first quarter, a trend that she described as unhealthy.
In Kowloon, sales dropped significantly - down 26 per cent on the previous week at just 55 transactions. Ricacorp said buyers were lured further afield to new property projects in other districts, including the Housing Society's Heya Green and Kowloon Development's Gardenia in Sham Shui Po, as their asking prices were closer to the prices of pre-occupied flats in their areas.
There were 24 sales on Hong Kong Island and 88 deals in the New Territories, drops of 11 per cent and 10 per cent respectively on the previous week.
David Chan said he believed secondary-home sales would fall a further 10 per cent this week, to about 150 transactions. 'Lingering concerns over Europe's debt crisis and worries that the local government will implement new policies to cool property prices will see more buyers and sellers adopting a 'wait-and-see' approach,' he said.