As developers step up launches to attract home seekers with more reasonable pricing, new flats are being pitched at prices much closer to secondary market values rather than at a staggering 40-50 per cent premium.
Attention is very much focused on the primary sales market, leaving the secondary market very quiet. In a bid to speed up sales, developers are raising commission fees payable to property agents. Compared to a normal 1 per cent commission for second-hand transactions, agents who successfully introduce buyers may be rewarded with 2 per cent or more of the property value, plus a cash bonus.
On Hong Kong Island, The Warren, developed by Wing Tai Properties in Tai Hang, sold 40 units within the first few days of the launch at an average price of about HK$18,000 per square foot.
'The sale of The Warren is going well, with 80 per cent of the current batch of units for sale already sold. The highest price per square foot was HK$25,600, while several buyers bought two units,' says Anita Chan, director of sales and marketing at Wing Tai.
In the New Territories, Providence Bay, a major joint venture in Pak Shek Kok undertaken by a Sino Land-led consortium, was selling the first 50 units at an average price of HK$10,731 per square foot. More than 120 units have been sold, with a 5,408 sqft house fetching HK$29,380 per square foot, a new primary sales record in the New Territories.
In Tseung Kwan O, Sun Hung Kai Properties is selling The Wings. Agents estimate that more than 300 units have been snapped up. A penthouse was sold for HK$37.15 million at HK$17,486 per square foot. Average apartments are selling at much lower prices, from about HK$7,600 to HK$10,000 per square foot.
Buggle Lau, chief analyst of Midland Realty, says developers appear to be keener to release their new projects now after a relatively quiet period for the primary market in the third quarter. With no more drastic government measures introduced since the recent policy speech, it seems to be the right time to lure buyers back to the market.
'Developers have to step up their sales programmes. This is especially true after some acquired new government residential sites and replenished their land banks recently. It is natural to launch more properties,' he says.
Lau says developers are now selling new flats at a much smaller premium of 10-20 per cent above secondary market prices, compared with 40-50 per cent before.
Lau expects developers will race to release projects in the coming months, with primary sales still the centre of attention for buyers and the secondary market remaining lacklustre.
Estate agents report that transactions for second-hand flats in popular private housing estates remain exceptionally slow. Midland Realty estimated only 12 deals were successfully closed among Hong Kong's top 10 developments during one weekend in early November. Hong Kong Property expects that secondary home transactions may fall to a three-year low with fewer than 4,000 deals in November.
The next major project to go on sale is expected to be Festival City phase three in Tai Wai by Cheung Kong. Kerry Properties is preparing to market 126-unit luxury project The Altitude at Shan Kwong Road in Happy Valley, while Soundwill Holdings will release Park Haven near Causeway Bay soon.
Wong Leung-sing, associate director of research at Centaline Property Agency, says there has been 'a pent-up demand from buyers as a result of fewer primary sales in the third quarter. The new projects being launched by developers at close to secondary prices have come at a good time to absorb those buyers.'
As more projects have received pre-sale consent from the Lands Department recently, Wong expects to see more primary sales launches in the next couple of months. 'The market is going through a correction period after its strong rally in the first half of this year. The prospect is difficult to predict right now, with various uncertainties.'