Slow sales seen as supply rises
New-home sales are expected to show little growth in the city this year, despite projections that the number coming onto the market will be the highest for three years.
Research by estate agency Ricacorp Properties shows that 87 new residential projects offering a total of 25,009 flats will be ready to be occupied this year - up nearly 18 per cent from the 21,276 flats added last year.
'New supply is increasing,' said Louis Chan Wing-kit, managing director of Centaline Property Agency's residential unit. 'But I don't think the transaction volume of new flats for this year will be more than the 16,000 deals recorded in .'
Chan said he expects around 10,000 new flats to be sold this year, little changed from sales of 10,504 new homes recorded last year.
'The fundamentals of the Hong Kong property market are sound and I don't think developers will be willing to sell their new projects at lower prices,' Chan said.
'There will be more new projects providing small flats sized from 500 to 600 square foot in the next few years. But developers will ask for HK$10,000 per square foot, which means such flats will cost at least HK$5 million, which is out of the budget of first-time buyers.'
Chan also expects government cooling measures, such as a special stamp duty, to be continued, which would make any significant rebound unlikely. Sales, he said, would fall short of the 15,913 deals in 2009.
However, Jeffrey Ng Chong-yip, senior director at Hong Kong Property, believed developers would adopt a conservative pricing policy for new projects given the plentiful supply.
In the secondary market, property sales have improved. Research by Midland Realty showed 62 flats at the 10 major housing estates changed hands during the Easter holiday from April 6 to 9 - up from the 49 sold over the Easter holiday last year.
'Some flat owners are willing to cut their asking prices to a reasonable level,' said Buggle Lau, chief analyst at Midland. 'It attracted end-users and long-term investors to buy flats during the holiday.'
On Saturday, Financial Secretary John Tsang Chun-wah warned about the danger of a property price bubble and urged buyers not to 'dash mindlessly into the market'.
Data from the Rating and Valuation Department's 'Hong Kong Property Review' shows 11,890 flats will be completed this year, up 26 per cent from the 9,450 released to market last year. The number of new flats released is expected to rise another 26 per cent to 14,930 flats next year.
About 54 per cent of the flats scheduled for completion this year are in the New Territories. Next year, the share of flats completed in the New Territories is expected to increase to 87 per cent.
Ricacorp's research shows 30 projects will be completed in the New Territories this year, offering a total of 17,644 flats. Yuen Long is expected to lead the way, with 3,833 flats from four new projects.
Centaline's Chan said access to transport would make flats in Tseung Kwan O attractive to local buyers, while the flats in Yuen Long would appeal to mainlanders and locals who need to travel to the mainland.
New supply in Kowloon and Hong Kong Island will stay low this year, accounting for 17 per cent and 13 per cent respectively of the year's total projected new supply. As such, Ricacorp projects property prices on Hong Kong Island will increase by 5 per cent to 10 per cent.
'New housing supply projected for Hong Kong Island is tight,' said Eric Cheung Wai-man, a director at Ricacorp. 'That will support prices, particularly luxury property prices.'