Hong Kong stamp duty

Hong Kong home sales spike as locals jump in to buy

Residential rally expected to continue but secondary market could slow as developers step up marketing of new home projects

PUBLISHED : Tuesday, 05 February, 2013, 12:00am
UPDATED : Tuesday, 05 February, 2013, 7:31am

Home sales rebounded sharply last month, driven by local buyers unaffected by the government's new stamp duty provisions targeting overseas and corporate investors.

Fuelled by excess liquidity and low interest rates, agents say the sales momentum will extend to next month as residential transactions continue to grow.

The number of residential transactions jumped 65.2 per cent to 5,430 from December, while the total value of deals surged 66.3 per cent to HK$28.5 billon, data released by the Land Registry on Monday showed.

Some buyers were willing to increase their offers to match the increases sought by sellers and deals were now being sealed faster

"Flat hunters stormed back into the market after they saw home prices showed no signs of falling. In addition, the overall improvement in the stock market also helped to restore buying confidence," Ricacorp Properties research head Patrick Chow Moon-kit said.

Chow said home sales would continue to rise as a growing number of people preferred to park their money in real estate as a hedge against inflation.

"Some buyers were willing to increase their offers to match the increases sought by sellers and deals were now being sealed faster," he said.

According to Many Wells Property Agent, a buyer agreed to paid HK$4.3 million, or HK$8,398 per square foot of saleable area, for a 512 square foot flat at Chelsea Heights in Tuen Mun, the most expensive deal for a property of that size in the housing estate.

Chow also attributed the big jump to the low base of sales in December, which fell to the lowest level since November 2008.

In December, home sales tumbled 53.3 per cent to 3,286 from November. For the week ended January 27, home prices rose 4 per cent despite the government introducing a 15 per cent buyers' stamp duty for corporate buyers and non-permanent residents to cool the market.

Total property transactions, including homes, offices and parking spaces, numbered 8,302 last month, 9.1 per cent fewer than in December. But Midland Realty said the January home sales figures were still 7.8 per cent below the average monthly figure of 8,969 for the past 20 years.

Buggle Lau Ka-fai, chief analyst at Midland Realty, said the total number of transactions in the secondary home market would slow as developers increase marketing of new projects.

"Home-seekers' attention will shift to the primary market as more new projects are put on sale in coming weeks," he said.

The number of flats changing hands in 35 housing estates monitored by Midland Realty dropped 44.4 per cent to 90 for the week ended January 27 as the Lunar New Year holiday approached, he said. "It is a traditional low season for the real estate market."

Chow said that so far this month 12 flats were sold to non-permanent residents, who must pay an extra 15 per cent buyer's stamp duty, compared with 11 similar deals last month. "These buyers are still proceeding with the purchases as they need to prepare accommodation for their children who are going to study in Hong Kong," he said.