Advertisement
Advertisement
Hong Kong property
Get more with myNEWS
A personalised news feed of stories that matter to you
Learn more
Property agent in the prime Happy Valley area of Hong Kong as sales in the city sank to their lowest in two decades. Photo: Felix Wong

New | Hong Kong property sales plummet to lowest in 25 years and the worst is on the way

Slump in one of the world’s priciest markets hits home

Property sales in Hong Kong plunged to 3,123, the lowest January figure recorded by the government since 1991 and the worst is yet to come, property agents said.

The transaction volume represented a 41 per cent decline month-on-month or a 62 per cent dive year-on-year as developers slow down on new launches in the wake of bearish sentiment and ahead of the Chinese New Year holidays.

Total transaction value fell 43.5 per cent month-on-month to HK$20.69 billion, the lowest amount hit since February 2009.

Midland Realty chief analyst Buggle Lau expected total sales will drop further next month to below 3,000 deals.

READ MORE: Hong Kong sees spurt in negative-equity home owners as property prices tumble

The market is plagued by sour sentiment in the wake of a rash of negative news including the return of negative equity owners, interest rate hikes and the withdrawal of government land sales, say analysts.

Sales of homes fell to 2,025, down 50 per cent month-on-month and 68 per cent year-on-year, according to Land Registry.

The plunge in sales volume was mainly due to slow primary launches as developers hope to launch their brand new projects after Chinese New Year
Thomas Lam

Midland Realty said there were 451 first-hand homes sold during the month, a drop of 78.9 per cent month-on-month.

Meanwhile, sales of used homes fell to 1,658, the lowest since Midland began recording data in 1996.

“The plunge in sales volume was mainly due to slow primary launches as developers hope to launch their brand new projects after Chinese New Year,” said Thomas Lam, Head of Valuation & Consultancy at Knight Frank.

As there is usually a lag of a few weeks between a transaction and it being registered at the Land Registry, the January figures actually reflect the market conditions in December to early January.

READ MORE: After three years, Hong Kong home sales watchdog takes its first legal action against a developer

Jeffrey Ng, senior executive director of Hong Kong Property Services (Agency), said buyers hesitated to enter the market after the United States announced its first interest rate increase in nearly a decade.

Hong Kong commercial banks are expected to follow in the coming months, pulling up mortgage rates. Lam said developers have to offer very attractive prices if they want to find buyers for their flats, especially in the New Territories.

Developers might even have to offer units at prices below the secondary market, he said.

Owners of existing homes have cut prices by more than 10 per cent around Hong Kong. Home prices, after a 12-year upcycle, fell 10 per cent from their peak in September. Some analysts expect prices to drop more than 30 per cent by 2017.

Post