Flat owners in Tai Po have refused to cut asking prices after a record low winning bid for a luxury residential site indicated land prices in the area have plunged by nearly half since 2007.
Great Eagle Holdings on Wednesday won the bid for the site in Pak Shek Kok, near the Science Park, for HK$2.412 billion, or HK$3,300 per square foot - at least 46 per cent lower than nearby waterfront sites sold six years ago.
Anthony Man, a district manager at Centaline Property Agency, said most flat owners at Providence Bay in Pak Shek Kok and other luxury housing estates have so far refused to budge.
"There are only 36 flats at Providence Bay available for sale in the secondary market. The owners would have to pay a special stamp duty of up to 20 per cent if they sold their flats now as they bought them within the last three years," he said.
"Previously, when investors were active in the market, they would cut prices right away on any bad news. But it's mostly end-users these days since the curbs were put in place."
Some owners of the 50 flats in the leasing market have, however, cut their asking rents by 3 to 15 per cent, he added.
"Buyers who have bought luxury flats in recent years have to pay a down payment of at least 50 per cent as the government has tightened mortgage rules.
"That makes it easier for those who bought their units in recent years to hold on to their properties. Also, since the interest rates remain low, most flat owners are reluctant to cut their asking prices," Man said.
The only exception is the owner of a house at Beverly Hills, who has cut his asking price by 14.7 per cent to HK$14.5 million.
Man said he expects prices of luxury flats in Tai Po to drop up to 10 per cent this year.
The low tender bid has come as bad news for Sino Land's new project in the area, Mayfair by the Sea I & II. The company bought the site for HK$7,215 per square foot in 2009.
Property analysts said that given market developments the asking price of the new project would now have to be competitive. "As a nearby site sold for only HK$3,300 per square foot, they would have to be careful," an analyst said.
"Most buyers at Providence Bay are mainlanders and local long-term investors. These buyers have kept away from the market since the government initiated the cooling measures in February last year."