Retail Sales

Sales drop as prices rise

PUBLISHED : Wednesday, 04 November, 2009, 12:00am
UPDATED : Wednesday, 04 November, 2009, 12:00am

Property sales in Hong Kong fell 23 per cent last month from September, the first month-on-month decline in seven months, as buyers turned cautious after the sharp price rises of the past few months.

Property agents warned that the downturn in sales was not yet over and predicted that sales of all properties this month would fall to about 9,500 from last month's 11,112 deals and September's 14,437.

Last month's figure, however, better reflected market activity in September because of the four-week time lag between transactions and registrations. Total volume was still 10.3 per cent higher than a year ago.

Total sales value fell 32.21 per cent month on month to HK$45.45 billion.

Market sentiment had turned weak as prices rose, banks tightened lending on luxury housing and the government warned bankers to monitor the housing market more closely, agents said.

Of the total transactions, 83.7 per cent was for residential units, with the balance being commercial and retail sales. Home sales fell 24.3 per cent month on month to 9,300, with the value of sales falling 35.31 per cent to HK$36.33 billion.

Patrick Chow Moon-kit, the head of Ricacorp Properties' research team, said the decline in total property transactions was because of cooler buying sentiment following sharp rises in prices this year.

In the mass housing market, prices have risen 28 per cent so far this year, while luxury home prices have shot up about 40 per cent - which prompted the government to ask banks to cut loan to value ratios from 70 per cent to a maximum of 60 per cent on flats valued at HK$20 million or more.

Looking ahead, agents said home transactions would continue to fall. Midland Realty's chief analyst, Buggle Lau Ka-fai, said the number of secondary transactions at 35 housing estates monitored by the agency during the week to November 1 dropped 24.3 per cent to 159, compared with a week earlier.

'Some home seekers have become more cautious about the market outlook, as they fear that the government will change the housing policy,' Lau said.

In addition many sellers remained unwilling to cut their asking prices, leading to a slowdown in home sales, he said.

Financial Secretary John Tsang Chun-wah told developers at a closed-door meeting last week the government would not rule out intervening in the property market if it became unfair to buyers. Chief Executive Donald Tsang Yam-kuen said two days later he was concerned about recent sales tactics and prices.