Fewer cheap flats sold last year
Sales of second-hand flats costing HK$2 million or less fell sharply last year, as rising property prices reduced their supply, according to Centaline Property Agency.
However, on a month-on-month basis the number of deals for such flats rose in December. That was because, as home prices began falling, sellers agreed to cut asking prices out of concern about the impact of the euro-zone debt crisis and the global economic slowdown.
There were 17,506 transactions in the sub-HK$2 million category last year, accounting for 25.8 per cent of flat sales in the secondary market, according to Centaline Property.
In December there were 2,674 transactions in the sub-HK$2 million category, accounting for 28 per cent of total sales that month in the secondary market. In November, the ratio was 27.3 per cent.
Last year, 67,845 flats changed hands in the secondary market, whereas in 2010, 111,248 second-hand flats were sold, of which 40.4 per cent, or 44,944, were priced at HK$2 million or less.
The proportion of total sales last year accounted for by those of flats worth HK$2 million or less was the lowest since 1996.
'As prices keep going up, the supply of flats priced at HK$2 million or below has declined,' Wong Leung-sing, an associate research director at the agency, said in a report yesterday.
The property agent said home prices rose 9 per cent last year, even though the housing market started consolidating in the second half.
Centaline Property said the supply of sub-HK$2 million flats would increase as prices continued falling.
According to the Centa-City Leading Index, home prices during the week from January 9 to 15 dropped 3.89 per cent compared with the week of November 28 to December 4. The average home price on January 15 was 5.69 per cent below the peak of 1997. The Centa-City Index tracks the average price of a second-hand home in Hong Kong on a weekly basis, with the first week of July 1997 serving as the index's base period.
Paul Chan, Invesco Hong Kong's chief investment officer for Asia, said home prices had been softening and sales had fallen as a result of government cooling measures. Sales momentum has slowed since July, after the government announced further tightening measures - on top of the special stamp duties announced in 2010 to penalise quick resales.
Increased land supply and rising mortgage rates in Hong Kong, restrictions on bank lending on the mainland, the euro-zone debt crisis and the global slowdown all helped to end the property market's bull run.
Chan expects home prices will fall faster this year, dropping more than 20 per cent to the level of 2007.
HSBC earlier said in a research report that home prices in the city had fallen in six of the past 15 years, based on the Centa-City Leading Index. The declines occurred over two periods: from 1998 to 2002 after the East Asian financial crisis and after the global financial crisis in 2008.
HSBC said although market weakness was likely this year, both economic conditions and market dynamics looked significantly more favourable now than in the previous downturns. It expects home values to drop 15 per cent this year.