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  • Oct 23, 2014
  • Updated: 8:22am
CommentInsight & Opinion
LEADER

Beware of buying flats too far ahead

PUBLISHED : Monday, 08 July, 2013, 12:00am
UPDATED : Monday, 08 July, 2013, 1:35am
 

Officials have rolled out a new measure to increase housing supply and bring prices down. From this month, developers can sell unfinished flats 30 months ahead of scheduled completion instead of 20 months. The plan is welcomed by some as giving more choices to buyers but criticised by others as helping developers offload stock at a time when interest rates may rise and prices fall.

The latest in a series of actions aimed at increasing short-term property supply, it will enable developers to release an estimated extra 15,000 units onto the market. The new flats include major projects such as YoHo Town phase three in Yuen Long and the fourth phase of Double Cove in Ma On Shan.

Similarly, a batch of 2,100 Home Ownership Scheme subsidised flats will be sold late next year, 24 months before completion, compared to the usual 15-month pre-sale period.

Developers will no doubt benefit from the extended pre-sales period in the near term. But there is no reason to consider it a gift to them. There is a short-term housing shortage in the private market. This will help increase supply. Under the plan, buyers will have more pre-sale flats to choose from, flats which otherwise would not have been available for nearly a further year. Previous measures, such as the doubling of stamp duty on the purchase of properties worth more than HK$2 million, have brought down prices, a goal the latest measure will help the government to achieve.

Of course, it is not without new risks for buyers. Because of the US-HK dollar peg, interest rates are expected to rise. If you believe that would bring down prices even more, you are unlikely to jump into the market. But this is more of a problem for speculators and investors than end-users, whose priority is to own a property rather than reap a quick profit.

Still, buyers must exercise caution, as they may be paying in a rising-interest-rate environment when the pre-sold flat is still not ready for occupancy. They will have to factor in such risks carefully when they make purchasing decisions.

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This article is now closed to comments

deendayal.lulla
Does the agreement between the buyer and the builder in Hong Kong contain a clause about guarantee of a building - how many years a building will last? In India,no such clause is there in the agreement. Also,do builders tell that the building is earthquake proof,and if yes to what extent on the richter scale. What about property tax - does the owner have to pay directly to the municipal authorities or a cooperative housing society collects the property tax from the flat owners ,and pays to the municipal authorities. What about other taxes like water,sewerage? Is there a building code in Hong Kong? How about nexus between the corrupt municipal authorities,and the builders,as it is prevalent in India? Is there redevelopment of old buildings?
Giwaffe
The practice of selling properties before their construction is complete (and therefore open to inspection) is questionable, ripe for abuse, and prematurely shifts the risks from the developer to the buyers.
14u2nv
How does making apartments that haven't even been completed available for sale 10 months earlier than before increase supply? What utter nonsense.
rpasea
Exactly how does this increase supply? The real winners here are the developers who can sell flats at the top of the market and be covered when interest rates - and property values - decline.
 
 
 
 
 

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