Market curbs 'forcing property agencies to shut'

PUBLISHED : Monday, 27 February, 2012, 12:00am
UPDATED : Monday, 27 February, 2012, 12:00am


Up to 300 property agency branches closed down last year, resulting in over 2,000 job losses as second-hand property transactions fell off, says a representative body that warns of similar hardship this year if the Hong Kong government does not ease some of its market curbs.

The Property Agencies Association (PAA), which represents nearly 80 per cent of the city's property agencies, has told agency watchdog the Estate Agents Authority (EAA) that more shops and jobs would be lost if the government did not review some of the rules, which the association said dampened transactions and added to the industry's costs.

The warning came despite rising property sales. The Centaline Property Agency said the number of second-hand property transactions this month could reach a nine-month high of 5,000.

The head of Centaline's research department, Wong Leung-sing, said the total transactions of second-hand properties for last month was expected to be 2,600, amounting to HK$13.5 billion in value - an increase of 8.5 per cent and 17 per cent respectively over the previous month, and the first jump in four months.

But PAA chairman Tony Kwok Tak-leung said that even a monthly transaction volume of 5,000 flats was still significantly lower than the average monthly transactions of 12,000 to 13,000 before the government introduced measures to cool the property sector in late 2010.

'We need around 8,000 transactions a month to maintain the livelihoods of the 20,000-odd property agents in the field. Though the market is warming up, currently monthly transactions are still nearly 40 per cent below this benchmark. Unless the market continues to improve - which we doubt - we fear another 5 per cent of agencies will go out of business.'

Despite a low-interest environment, policies such as extra stamp duty, tougher mortgage conditions and restrictions on reselling property had hurt volumes, Kwok said. He said the agencies suffering the most were small and medium-sized ones, which made up about 75 per cent of the 6,000 outlets in Hong Kong.

'No one knows how long the little boom will last, but the sector's ability to overcome the downturn is certainly weakened, with ever-rising expenses as a result of rising wages and additional costs from new sales rules,' Wong said.

Property agents will soon be required to provide information such as 'the saleable area' of a flat to potential buyers, which they must obtain from an online search engine of the Rating and Valuation Department at a cost of HK$9 per inquiry.

Kwok said an agency received between 300 and 1,000 property sales requests every month, which would translate into several thousand dollars in additional monthly expenses for each firm, and tens of millions of dollars in monthly income for the government.