Fears over U.S. debt and Euro help lift sales
Fears over the economic outlook for the United States and Europe may boost the number of secondary homes sold in Hong Kong, as more sellers become willing to cut prices steeply.
'The debt crisis in Europe has worsened and the US credit rating was lowered, which has led to slumps on the global stock markets, residential flat transactions [in Hong Kong] have not been affected,' said Ricacorp director David Chan. 'Due to the crises, sellers are now offering more room for price negotiation, which stimulates transactions.'
According to sales records in the 50 largest private housing estates in Hong Kong tracked by Ricacorp, there were 189 secondary home sales between August 1 and August 7. The figure is up 3 per cent compared with 183 transactions the previous week.
Chan said sellers were now 'breaking the ice by cutting prices by 3 per cent to 5 per cent', ending the deadlock of the past few weeks when owners and potential buyers differed significantly on price. He believes transaction numbers will climb gradually in the next two to three weeks.
An owner of a 1,463-square-foot house at Palm Springs recently sold his property for HK$4.8 million, or HK$3,281 per square foot, about 24 per cent lower than the market price.
Jacky Lung Chi-fung, a senior district director at Centaline Property Agency, said the owner at first cut the price by HK$1 million to HK$5.3 million because it had been difficult to sell the flat as someone had died there in 1998. The owner cut the price by a further HK$500,000 after the outbreak of the European debt crisis, saying it would be more profitable to buy stocks than hold bricks.
But not everyone is seeing an uptick. Midland Realty, which monitors transactions of 35 housing estates in Hong Kong, said property sales dropped 16.4 per cent to 107 deals for the week ending last Sunday, from 128 sales the previous week.
Midland deputy chairman Albert Wong Kam-hong said the dip was not as severe as the ones seen after the government introduced the extra stamp duty in November and tightened mortgage loans in June, when transactions fell by nearly 60 per cent and 43 per cent respectively.
Vincent Cheung Kiu-cho, Cushman & Wakefield's national director for valuation and advisory services in greater China, said residential flat prices would remain stable in the second half of the year due to the uncertainty of the global economy, after property prices rose significantly in the past two years.
He predicted property prices would fluctuate plus or minus 5 per cent in the second half of this year.
The property consultancy said it had not yet seen any multinational companies fleeing Hong Kong and vacating their office premises because of the debt crisis.
Saying that prime office rentals rose quarter on quarter by 8.3 per cent and 6.3 per cent in the first and second quarter of this year, the company expects increases to drop to 3 per cent to 5 per cent in the second half.