Sales of flats at nine Hong Kong property projects suspended in wake of new government cooling measures
Demand for first flats to go on sale after Friday’s announcement – at Alto Residences in Tseung Kwan O – also takes a knock; developers likely to offer incentives to spur sales
Major developers have suspended sales of flats at nine property projects following Friday’s announcement of a sharp increase in stamp duty rates.
This came as fewer home buyers showed up on Saturday for the first residential project to be put on sale in the wake of the government move to impose a 15 per cent stamp duty on non first-time buyers of residential properties.
Sun Hung Kai Properties issued a formal notice suspending sales of flats at six projects – Ultima, Grand Yoho, The Cullinan, Twelve Peaks, Ocean Wings and Twin Regency.
The developer said it was seeking to review the payment terms on the six projects since they mostly involved tax rebates.
Also suspended was the sale of flats at Park One, a project by Henderson Land Development, and New World Development and Hip Shing Hong’s The Pavilia Hill.
Swire Properties, which earlier this week announced discounted prices for 12 houses in its upscale Whitesands property on Lantau, is also holding off on a relaunch.
A spokesman for Swire Properties told the Post that while the developer was “not overly exposed to the Hong Kong residential market”, it did not think it was a “good time” to launch the remaining units.
“We will hold off on the relaunch ... and closely monitor the market situation,” the spokesman said. “Any new sales plans will be announced as and when they are available.
Sammy Po, chief executive of Midland Realty’s residential division, said developers had to halt sales to rethink their sales strategies. “The situation will last for a while,” he added.
Dampened demand was evident when about 100 flats went on sale on Saturday at Alto Residences, a Tseung Kwan O project developed by Sun Hung Kai Properties’ former chairman Walter Kwok Ping-sheung and Hong Kong-listed Lai Sun Development.
Prices for flats started at HK$15,180 per square foot. Between 2,000 and 3,000 subscriptions had been received for the sale.
But industry observers said that buyer turnout for the sale was not as strong as in previous months.
Eric Fong, district sales director at Midland Realty for Tseung Kwan O, said the firm’s buyer turnout was only about 50 per cent of the received subscriptions, down from the usual 80 per cent.
Most of the prospective buyers who turned up were first-time buyers, Fong said, as investor interest declined due to the new increase in stamp duty rates.
The developer of Alto Residences said that as of 5pm on Saturday, it had sold 70 per cent of the flats available.
On Friday, Chief Executive Leung Chun-ying announced that stamp duty would be raised to 15 per cent on all residential property transactions except those by first-time buyers with permanent residency, in an attempt to cool a buying spree in Hong Kong driven by an abundance of credit in China and mainland buyers hedging against the falling yuan.
Previous stamp duty rates on properties that cost more than HK$2 million ranged from 1.5 to 8.5 per cent, with foreigners already paying double the stamp duty rate as well as an additional buyer’s stamp duty.
Louis Chan Wing-kit, Centaline Property Agency’s managing director, said that developers were likely to offer incentives to buyers to support the sale of flats.
“Primary markets may see a drop of 40 per cent in transactions, but from next week, developers will likely cut apartment prices or give discounts equivalent to the stamp duty rate to encourage purchases,” Chan said.
Centaline said on Saturday that it had closed two transactions on Friday night in Sha Tin district, as buyers rushed to complete the purchases before the increased stamp duty rates came into effect on Saturday.
A two-bedroom flat at Lucky Plaza was sold to a mainland buyer for HK$4.5 million, while an investor spent HK$6.4 million on a two-bedroom apartment in Castello.
Buggle Lau, chief analyst with Midland Realty, said the secondary market would be hit the hardest following the imposition of higher stamp duty rates.
“After this measure [to cool the property market], secondary market transactions will probably drop about 60 per cent compared to the previous two months,” Lau said, adding that raising the stamp duty was likely to curb demand from investors and prospective buyers in the secondary market.
“Supply in the secondary market will also drop because of the increase in stamp duty, as current home owners will be more reluctant to sell their existing flat and pay a higher stamp duty when they purchase a new home,” Lau said.
Hayes Lam, a prospective buyer at the Alto Residences sale, said he was hoping to buy a one-bedroom flat as he liked the sea view and the neighbourhood.
“It is my first time buying property, so the higher stamp duty does not affect me,” said Lam, who added that he had no plans to purchase other properties for investment.
Another prospective buyer, who wished only to be identified as Fung, said he was looking to purchase a flat for self-use and was also unaffected by the higher rate. He supported the government’s policy to introduce a higher stamp duty to help stabilise the property market.
“This makes the cost higher for speculators and investors, but doesn’t prevent first-time buyers from entering the market, so I agree with this policy,” Fung said.
Additional reporting by Peggy Sito