The first eligible buyers selected by lottery for flats in Greenview Villa in Tsing Yi, a subsidised housing project by the Hong Kong Housing Society (HKHS), were invited last week to choose their units. Guess how many turned up?
On the first day, just 60 per cent of the first 160 showed up. By Saturday, only 802 of the 1,600 applicants called appeared, and 717 flats were sold.
This was in sharp contrast to the frenzy when the development was launched in January that led to the flats being oversubscribed almost 60 times.
All that was needed was the payment of a token sum to be considered for placement through lottery and to enter into a formal agreement to buy only on choosing a flat. So the absence of those at the head of the queue means they have surrendered their right to a flat in the project.
At the time of the lottery, HKHS chief executive Wong Kit-loong said the overwhelming response reflected strong demand and predicted all 988 units in the development would be snapped up. As of Saturday, 271 flats remained unsold.
So, where has all the demand gone?
Greenview Villa, near the Tsing Yi MTR station, is under construction and due for completion in 2015. It is the first subsidised housing development launched under Chief Executive Leung Chun-ying's administration and is part of the government's plan to increase supply in a bid to increase home ownership and make homes more affordable.
Prices were set at between HK$2.4 million and HK$5.1 million, or an average of HK$6,510 per square foot in terms of saleable area.
HKHS has said the prices were about 30 per cent lower than the market rate for new units in the area. The scheme also assures buyers mortgages of up to 90 per cent of the property price from banks and other recognised financial institutions.
Incentives such as these probably explained the overwhelming response when the project was launched. But things have gone downhill since.
When the development was launched, the market was undergoing a cautious recovery after the slowdown caused by the introduction in November of a buyer's stamp duty and the extension of another stamp duty aimed at curbing flipping.
As potential buyers believed prices would rise, they made a beeline for the Greenview Villa project. But ever since the government introduced the latest measure to curb prices - doubling the stamp duty for properties of more than HK$2 million - the market has lost more steam and prices in some housing estates have actually started to fall.
Potential buyers have clearly decided to wait and see.
"I believe that many potential buyers [of Greenview Villa] have realised they will have far greater choice in the future, and that prices may even fall. And in reality they can make a considered decision and do not need to be stampeded into taking action now," said Nicholas Brooke, the chairman of Professional Property Service Group.
"In other words, the undertakings given by C.Y. that housing is a major priority are beginning to be believed."
Property consultancy Landscope Christie's International Real Estate's managing director and founder Koh Keng-shing also believes the government is determined to increase supply and that potential buyers did not show up because of the prevailing market sentiment.
"When they joined the lottery, they were expecting prices to rise. Now with prices falling in some districts, they have decided to hold back," Koh said.
That sounds right, but it begs the question: when the government's planned increased supply comes into the market in the next four to five years, will there be a balance in the market, or will buyers return to a downward spiral of waiting for prices to drop?