Don’t jump recklessly into Hong Kong property market, minister warns
Paul Chan says potential buyers should take a cautious approach given the large supply of new flats in the pipeline
Secretary for Development Paul Chan Mo-po urged home buyers on Thursday not to jump recklessly into the property market, predicting an ample supply of new flats over the coming years.
Chan advised caution amid a moderate recent rebound in the property market, with residential transactions staying above 4,000 for the past four consecutive months, and home prices climbing to a six-month high at HK$11,203 per sq ft on average in July, according to research by Ricacorp Properties based on sales at 50 estates.
Chan urged buyers to remain cool-headed, reminding them that supply would reach 93,000 new flats in the next three to four years, the highest since 2004, and the government was still determined to meet its target of adding 18,000 flats by the end of this year.
“In the coming two to three quarters, I predict the supply to remain at a very high level, ” he said. “We will definitely add more land supplies this year ... we will not hold back.”
Chan added there was a seesaw battle between developers offering discounts at new launches and buyers holding back in the hope of securing better deals.
“Buyers should not act rashly at the moment,” Chan said.
Despite the rebound in home prices, Chan said overall conditions remained weak historically.
Government statistics showed home transactions stood at 19,900 in the first six months, while 50,000 to 60,000 were recorded each year between 2013 and 2015.
Eddie Hui Chi-man, a professor who specialises in real estate studies at Polytechnic University, said an ample land supply and deteriorating economic conditions would weigh on prices towards the end of the year, which he considered more fundamental elements moving the sector.
“House prices might dip further at the end of the year,” Hui said. The better transactions and prices observed recently were largely due to the increasing capital inflows to Asia and lower expectation of a US interest rate rise after the Brexit vote in June.
But property market uncertainties are not stopping mainland developers from splurging on land in the city, sparking concerns it could drive up home prices.
Beijing-headquartered Minmetals Land on Wednesday secured a residential site in Yau Tong for HK$4 billion, or HK$7,000 per sq ft, a record for an industrial plot.
Chan said there was no need for Hongkongers to be concerned about aggressive buying by mainland developers.
The development minister said it was difficult to decide whether the prices offered were too high judging from one or two auctions, but he would continue to monitor the market.