Hong Kong house prices 'set to fall by 20pc'

PUBLISHED : Friday, 30 November, 2012, 12:00am
UPDATED : Saturday, 01 December, 2012, 8:31am

A government housing adviser has forecast Hong Kong home prices should tumble 20 per cent before reaching what he regards as a reasonable level, reiterating the latest round of cooling measures would be effective in curbing investment demand.

"Buyers have changed their price expectations after the rolling out of curbs [in late October]," said Stanley Wong Yuen-fai, chairman of the subsidised housing committee under the Housing Authority and a member of the Long Term Housing Strategy Steering Committee.

Without giving a timetable, he believes a 20 per cent price correction would bring prices down to the level seen earlier this year.

His remarks came as Centaline Property Agency' s secondary home price index eased by 0.55 per cent for the week of November 18, after hitting a record high of 116.81 points the previous week. The Centa-City Leading Index compiled by the agency, which tracks prices at 100 mass- and luxury housing estates across the city, recorded its first fall in the past eight weeks after a 15 per cent stamp duty was introduced on companies and non-permanent residents who buy homes in the city from October 27.

Home prices have shot up by 20 per cent since January.

Other analysts have different views on the market outlook.

Adrian Ngan, analyst at Citic Securities International, expected home prices to drop 3 to 5 per cent in the next six months.

"There are other unreasonable factors affecting the property market," he said, adding the city's tight housing supply coupled with historical low interest rates meant that a big fall in home prices was unlikely.

Alfred Lau, a property analyst at Bank of Communications International, predicts home prices will grow by 5 per cent next year and said developers would narrow the pricing gap between the primary and secondary market when they launch new projects in a bid to up sales.

Cheung Kong (Holdings) announced yesterday it was selling its first batch of 50 flats at its One West Kowloon project in Lai Chi Kok at an average price of HK$10,833 per sq ft, about 22 per cent lower than the intended price the developer had announced earlier. Cash buyers can receive a 10 per cent discount, meaning the average price would be around HK$9,750 per sq ft.

One West Kowloon is the first residential project to release a price list after the government launched a series of housing measures, including a buyer's stamp duty, to cool the property market in late October.

A property agent, who spoke on condition of anonymity, said the prices might be lower than secondary flat prices at Sun Hung Kai Properties' Manhattan Hill, which were sold for about HK$13,000 per sq ft recently, but secondary flat prices at newer housing estates in Lai Chi Kok were only priced between HK$8,000 and HK$9,000 per sq ft.

The 50 flats on offer are three-bedroom and four-bedroom apartments ranging from 864 sq ft to 971 sq ft in gross floor area. The price tags are from about HK$11.73 million to HK$15.23 million before discounts.

A Midland Realty survey has found that mainland buyers' appetite for Hong Kong homes have weakened as price differences between Shenzhen and the city's northwest have widened to 120 per cent, from 50 per cent in 2007.

"It is the biggest price gap for the past 68 months. And mainlanders will revive their buying interest for homes in Shenzhen," the company said.

The project may go on sale as early as next week.