Secondary transactions fall as buyers await SHKP releases

PUBLISHED : Wednesday, 26 November, 2008, 12:00am
UPDATED : Wednesday, 26 November, 2008, 12:00am

Property sales at major housing estates lost momentum last week as potential buyers stayed on the sidelines in anticipation of Sun Hung Kai Properties adopting a low-price strategy at the upcoming sale of two new projects.

According to Ricacorp Properties, 234 deals were concluded during the week from November 17 to 23 in the 50 major housing estates in the secondary market that it monitors. This represented a 15 per cent decline compared with the preceding week.

Patrick Chow Moon-kit, the head of research at Ricacorp Properties, said the lower transaction volume, particularly in Yuen Long and Sha Tin, was due to the forthcoming release of the SHKP properties.

SHKP has said that its mass residential project La Grove in Yuen Long and a luxury housing development, Peak One, in Sha Tin would be put on sale this week.

'Market attention will focus on the pricing for the two projects as they could serve as an indicator for the primary residential market,' said Mr Chow, who added that he expected a strong sales response at La Grove only if SHKP released the project at below secondary market transaction prices.

Slow sales were recorded during last week in northwest New Territories such as Yuen Long, Fanling and even Tsuen Wan as the upcoming sale of La Grove could have lured buyers away from the secondary market, he said.

SHKP has said it will offer a 2 per cent discount for the first 10 La Grove units for its club members.

It said units with two bedrooms would be released for below HK$2 million each. The project comprises 542 units ranging from 570 to 1,100 square feet each and 70 units will be released in the first batch.

'It will sell like hot cakes if the two-bedroom units sell for HK$1.5 million each,' Mr Chow said.

That would represent a price of HK$2,600 per square foot whereas current transaction prices for a 580 sq ft unit at Yoho Town, a relatively new development in the area, were HK$1.8 million or HK$3,100 per square foot.

In Sha Tin, sales also stalled as a result of the soon-to-be launched Peak One and according to Mr Chow buyers were also discouraged because owners at Sha Tin refused to give further discounts because they felt market sentiment had improved slightly from last month.

'Units offered at steep price cuts by financially troubled owners were snapped up by bargain hunters,' he said, but owners who increased asking prices for the 395 sq ft units to HK$1.4 million each from HK$1.2 million a month ago were having difficulty finding buyers.

Wong Leung-sing, an associate director in the research department at Centaline Property Agency, expects property sales will pick up after the Hong Kong Mortgage Corporation last week announced plans to relax the threshold for mortgage insurance, which could encourage banks to lend more.

Hong Kong Monetary Authority deputy chief executive Peter Pang Sing-tong said last Friday the corporation might relax the threshold to 60 per cent. This would mean that even if the banks were willing to lend only 60 per cent of valuation, buyers could still apply for mortgage insurance.