Hong Kong home sales up for the first time after 8 straight months of decline, but analysts say prices will continue to fall
Property sales in Hong Kong are estimated to have picked up in March after falling to the lowest level in 25 years in February, reversing an eight-month losing streak, but analysts warn the downturn is far from over and home prices will continue to fall.
According to property agency Midland Realty’s estimates, total property transactions lodged with the city’s Land Registry last month came to 3,125 – a 21.8 per cent rise from February.
In February, Hong Kong recorded just 2,583 transactions, the lowest since Midland began the monthly survey in 1991. Home sales have been falling every month since last July.
The Land Registry will announce the official March figures this week.
Property agents said eager home seekers are returning to the market as both landlords of existing homes and developers launching new projects cut prices top push sales.
Midland said second-hand homes sales last month increased 13 per cent month on month to 1,973. Sales of new units also jumped to 639 from 233 in February as developers rolled out new projects, such as Sun Hung Kai Properties’ Twin Regency in Yuen Long.
Developers in February released the first batch of 108 units at Twin Regency at an average price of HK$11,360 per square foot, about 15 per cent lower than Cheung Kong Property’s Yucci Square launched in the same district in November.
Eleven new projects, totalling nearly 4,200 flats, are slated to be released in the coming months. More than half of these are located in Yuen Long, according to Ricacorp Properties.
Midland expects home sales transactions to continue to rise in April as developers are in a rush to sell their stocks and flat owners willing to cut prices as well.
“The short-term rebound in sales does not mean the market has stabilised. It is already in the middle of a downturn and home prices will continue to fall,” said Derek Chan, head of research at Ricacorp Properties. The agency has recently revised down its forecast, predicting the city’s home prices will drop 15 per cent this year. It had earlier estimated a fall of 10 per cent.
Chan cited the increased supply and a weakening Hong Kong economy due to falling retail sales and dwindling number of tourists as reasons for the bearish outlook.
In the first two months of the year, prices of second-hand homes in 50 housing estates fell 5.5 per cent, according to Ricacorp Properties. Centaline Property Agency estimates home prices fell 13 per cent from their peak in September. Government data show prices fell 10.9 per cent between September and February.
Thomas Lam, head of valuation and consultancy at Knight Frank, said he agreed that the residential market is in a downturn, adding that he expects a 10 per cent price drop this year. Prices will fall faster in the first half than in the second, he added.
UBS last week projected a 25 per cent plunge in prices over the next two years as a result of rising housing supply and slowing world economy. The investment bank said in a report that the downtrend is already visible and that overall economic concerns may accelerate corrections across sectors, but that a market bottom is difficult to predict.