Transactions drop to 17-week low

PUBLISHED : Wednesday, 09 July, 2008, 12:00am
UPDATED : Wednesday, 09 July, 2008, 12:00am

Property sales in Hong Kong's secondary residential market slowed down to the lowest for 17 weeks as the rise in mortgage rate and poor performance of the stock market began to hurt market sentiment, property agents said.

Only 291 units changed hands over the past week in the 50 key housing estates monitored by Ricacorp Property, down 11.8 per cent from 330 units a week earlier.

If the week between February 4 and February 10 - during which the Lunar New Year holiday fell and transaction was traditionally slow - was excluded, transaction volume over the past week was the lowest in 45 weeks.

The transaction volume was also far below the average 479 units over the past 52 weeks.

Nevertheless, average transaction price remain unchanged over the last week.

'The anticipation of rising mortgage rate and the weak performance of the stock market are beginning to hurt homebuyers' confidence in the property market and they now tend to spend longer time in flat viewing,' said David Chan, a director at Ricacorp.

'However, sellers generally are staying firm on their asking prices thus resulting in slowing down activities in the secondary market.'

Mr Chan believes the poor market sentiment will prevail for some time and transaction volume will hover at about 300 units a week, while house prices may go down 3 to 5 per cent this quarter.

On the other hand, the primary sector was quiet because there was no new large-scale project launched which could stimulate overall transactions, said Fredy Wu, the chief executive of Hong Kong Property.

Developers are mainly selling units at their single block projects with about 100 flats in each project, and many of them had been launched for sale for some time.

About 10 units were sold during the weekend, compared with 77 sales a week earlier.

Agents generally believe the market transactions will rebound in the fourth quarter when more large-scale new projects are launched for sale.