Liquidity crunch forces mainlanders to cash out of Hong Kong luxury homes

Cash-strapped mainland Chinese are scrambling to sell their luxury homes in Hong Kong, and some are knocking up to a fifth off the price for a quick sale, as a liquidity crunch looms on the mainland.

Wealthy Chinese were blamed for pushing up property prices in the city, where they accounted for 43 per cent of new luxury home sales in the third quarter of 2012, before an increase on stamp duty on non-resident buyers was announced.

The rush to sell coincides with a forecast 10 per cent drop in property prices this year as the increase in duty and rising borrowing costs cool demand.

At the same time, credit conditions in China have tightened. Earlier this week, the looming bankruptcy of a Chinese property developer owing 3.5 billion yuan (HK$4.4 billion) heightened concerns that financial risk was spreading.

“Some of the mainland sellers have liquidity issues say, their companies in China have some difficulties so they sold the houses to get cash,” said Norton Ng, account manager at a Centaline Property Agency office close to the border, where luxury houses costing up to HK$30 million have been popular with mainland buyers.

Property agents said mainlanders own close to a third of the existing homes that are now for sale in Hong Kong – up 20 per cent from a year ago. Many are offering discounts of 5-10 per cent below the market average – and in some cases as much as 20 per cent – to make a quick sale, property agents and analysts said.

In a Hong Kong housing development called Valais, about 10 minutes drive from the border, real estate agents said between a quarter and half of the 330 houses are now on sale.