Bright patches fail to lift homes market

PUBLISHED : Sunday, 23 October, 1994, 12:00am
UPDATED : Sunday, 23 October, 1994, 12:00am

PROPERTY prices are expected to drift further despite evidence the market is turning in some areas of the territory.

The latest monthly Brooke Hillier Parker survey of the residential market in North Point, Quarry Bay and Chai Wan found prices down in one district but up in two others.

North Point property values fell 2.2 per cent between August and September while Quarry Bay recorded a 1.1 per cent rise and Chai Wan prices improved 2.2 per cent over the same period.

'We are seeing evidence that some of the better properties will hold their value and may even improve from month to month. But the outlook remains patchy, with the overall trend likely to drift down further,' said David Faulkner, a partner with Brooke Hillier Parker.

September was traditionally a buyers' month and price increases were based on seasonal rather than fundamental factors, he said.

August was usually a quiet month but the trend had been obscured in the past two years because of the strong bull market which had attracted buyers throughout the year.

Reasons for the overall weakness in the market remain firmly stuck on interest rate worries and affordability.

The shadow of interest rate rises has hung over the property market since the first surprise move by the US Federal Reserve on October 4. Subsequent rises have done nothing to allay market fears that rates will continue to climb this year and well into 1995.

Affordability has also restricted first-time buyers, with the 70 per cent mortgage ceiling cutting substantial numbers of potential buyers out of the market, said Mr Faulkner.

A 30 per cent down-payment on a mass residential property amounts to about $1 million on Hong Kong island and about $400,000 in the New Territories.

'It is hardly surprising that buyers are keeping out of the market when they have to stump up that amount of cash to qualify for a mortgage,' Mr Faulkner said.

He added that Hong Kong needed to establish a more stable property market after the 30 to 40 per cent annual increases seen over the past two years.