The state of the city's property market will be tested from next month when a flood of pent-up releases is expected once developers have completed new marketing material that complies with tighter sales regulations introduced by the government.
Most new projects were put on hold this month as developers revised their sales brochures to fall in line with the provisions of the new Residential Properties (First-hand Sales) Ordinance.
The ordinance, which took effect from April 29, requires sales brochures for all new projects to specify the size of new flats in terms of "saleable floor area", and that brochures be published at least seven days before the release of the projects.
Centaline Property managing director Louis Chan Wing-kit said he believed developers would offer their new projects at "realistic prices" because they needed to catch up with their sales targets after the pause in releases. "Their pricing strategies for upcoming new projects will provide an indicator of the future market outlook," he said.
Agents said more than 11,700 new flats were in the sales pipelines for the second half this year and 1,600 could be released next month.
Due for release are Cheung Kong's 402-flat The Rise in Kwai Chung; The Avenue, comprising 1,275 flats in Wan Chai, by Sino Land, Hopewell and the Urban Renewal Authority; the 192-flat The Graces, which is the third phase of Providence Bay in Tai Po by Sino Land; New World Development's 236-flat The Woodsville in Yuen Long; and Sun Hung Kai Properties' 161-flat Imperial Kennedy in Western District.
An associate director of Sino Land, Victor Tin Sio-un, expected The Graces to be the first fresh release of a previously unlaunched residential project since the passage of the new ordinance, as it had secured pre-sale consent from the government. No decision on the official launch date had yet been decided, he said, "but we are preparing sales materials at the moment".
Centaline's Chan said he believed developers would need to offer their projects at prices as much as 20 per cent lower than a year ago to attract strong buying interest.
But a property analyst at brokerage Bocom International, Alfred Lau, disagreed and said land prices had not declined significantly and there were no incentives for developers to offer steep discounts. "Sales in the secondary market have recovered since property prices dropped 4 per cent since March. That shows home prices are close to bottoming out," he said.
In a report released on Monday, a property analyst at investment bank BNP Paribas, Patrick Wong, wrote: "We expect pent-up demand to support the rebound of secondary volume and attract more developers to speed up their new launches over the next few weeks."
Henderson Land Development and New World last Friday published their revised sales brochures for The Reach in Yuen Long, making it the fourth project ready for pre-sale under the new regime.
Meanwhile in the secondary market, the number of flats changing hands in 35 housing estates monitored by Midland Realty rose 14.6 per cent to 110 for the week ended May 19. It was the first in the past 15 weeks that sales exceed 100 deals per week.
In the primary market only two flats sold on the long weekend, the same number as the previous weekend. Only three projects are for sale under the new law at present: Swire Properties' Dunbar Place in Ho Man Tin; Hong Kong Ferry's Green Code in Fanling; and Sino Land's The Avery in Kowloon City.