Hong Kong property

Hong Kong homebuyers undeterred by mortgage rate rises in seeking Kai Tak flats

Demand remained strong despite developer raising prices by 9 per cent

PUBLISHED : Saturday, 03 June, 2017, 5:17pm
UPDATED : Saturday, 03 June, 2017, 10:22pm

Homebuyers appear undeterred by the increase in mortgage rates by Hong Kong’s biggest banks this week, snapping up over 95 per cent of flats from the latest batch on offer at Victoria Skye at the old Kai Tak airport site.

Demand for apartments remained strong despite developer K & K Property raising prices for the 200 units by 9 per cent last week. Buyers purchased 191 flats by 5pm on Saturday – or over 95 per cent of the 200 flats on sale.

Buyers shrug aside rising mortgages as thousands throng sales offices to snap up homes

The increase in the interest rate is very slight, so it will not have much effect on curbing demand
Sammy Po, Midland Realty

The sale comes after Hong Kong’s biggest banks, including HSBC and Standard Chartered, raised their mortgage rates last week. Rates were increased by 10 basis points to 1.4 percentage points above the city’s interbank offered rate, or Hibor, shortly after the Hong Kong Monetary Authority introduced new regulations aimed at cooling the surging property market.

The authority’s new regulations state that banks must allocate a larger risk weighting to their assessment of credit worthiness, while cutting the amount of allowable loans on residential and commercial properties.

“The increase in the interest rate is very slight, so it will not have much effect on curbing demand,” said Sammy Po Siu-ming, Midland Realty’s residential division chief executive.

Po added that there was an abundance of buyers and funds in the market, resulting in an increase in home demand from buyers who hope to buy flats as an investment.

Louis Chan Wing-kit, the Asia-Pacific chief executive of Centaline Property Agency’s residential department, said that property prices remained strong as buyers were worried that the incoming government may implement further cooling measures.

Buyers were therefore more willing to enter the market now, he said.

The average price for the 200 units in the second batch of Victoria Skye flats put up for sale on Saturday was HK$19,780 per sq ft after a discount of 18.5 per cent.

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Prices for the latest batch are about 9 per cent higher than the HK$18,228 per sq ft for the 307 flats released in the first batch last week. On May 27, the developer generated over HK$2.6 billion from the sale of 306 flats.

The latest batch of units, ranging from 232 sq ft to 1,190 sq ft, was being sold for HK$4.98 million to HK$29.66 million on Saturday. The cheapest is a 232 sq ft apartment on the 21st floor, with a price tag of HK$4.98 million, or HK$21,467 per sq ft.

Home buying fever is showing no signs of abating. Cheung Kong Property Holdings sold 842 units at Ocean Pride in Tsuen Wan after attracting thousands of prospective buyers who waited hours for a chance to submit an application.

The first round of 496 flats was sold on May 26, and 346 units went on May 31.

The company raised prices for the third batch of 122 units at Ocean Pride on Thursday, boosting prices by up to 10 per cent to HK$17,514 per sq ft.