Hong Kong secondary home sales plunge to Sars-era levels

Property firms may lose one-third of branches and workforce if government cooling measures continue, says Midland as it posts big profit rise

PUBLISHED : Saturday, 16 March, 2013, 12:00am
UPDATED : Saturday, 16 March, 2013, 3:58am

Secondary home sales have fallen to their lowest levels since the Sars outbreak in 2003, sparking a warning that the city's real estate industry is headed for troubled times.

Property agency Midland said the number of real estate agents and branches might drop by nearly one-third if the government kept its tight grip on the housing market.

"There were only about 3,000 transactions in the secondary home market [last month], similar to that during the Sars period," the company's deputy chairman Angela Wong Ching-yi said during a press conference on the firm's annual results yesterday.

"Back then, there were only 14,800 property agents, meaning five brokers fought for one deal. But now, there are 37,000 employees in the industry, which means 10 agents have to compete for one transaction a month. Nearly 90 per cent will not have any deals."

There were about 5,800 deals per month last year.

Wong said that if the government maintained its tightening measures to check soaring prices, 30 per cent of all property agents, or 12,000 employees, would lose their jobs. Close to one-third of the agencies would be forced to shut down, leaving only 4,500 branches in the market.

Her comments came as the company reported an 87 per cent increase in net profit to HK$249.83 million for last year. Turnover grew 15 per cent to HK$3.91 billion.

Wong said the surge was due to an increase in property transaction prices. Despite the government's intervention policies such as the special stamp duty and buyer's stamp duty, which dampened the residential market, the company managed to book more transactions from the non-residential property market last year.

There were only about 3,000 transactions in the secondary home market [last month], similar to that during the Sars period

According to the Land Registry, the number and value of property sale and purchase agreements last year rose 6 per cent and 11 per cent, respectively.

Saying the residential market would be dominated by new launches this year, Wong said the company would deploy or recruit more people to target sales in the primary market.

The company did not say whether it faced pressure to streamline its workforce or shut down its outlets, but said government measures "have become more frequent and fierce" that the property market was expected to be more volatile than last year.

It expects price volatility of 5 to 10 per cent and potential downward pressure on property prices.

Midland chairman Freddie Wong Kin-yip urged the government to consider easing its controls on the residential market if prices dropped by about 5 per cent.

"Property prices have hit their peaks already," he said. "The government wants flat prices to go down and if they do, it should retreat from the market."

It forecast the number of secondary home transactions to decline to fewer than 3,000 this month, after banks raised mortgage lending rates by 0.25 percentage point this week.

Midland proposed a final dividend of 10 HK cents per share, lifting the payout for the year to 24.34 HK cents per share from 30.67 HK cents previously.

Midland shares rose 2.92 per cent to close at HK$3.52 yesterday.