Hong Kong home sellers begin to drop prices to lure buyers in depressed market

Hong Kong home sellers have begun cutting their asking prices in response to weakening buying sentiment, property agents say.

The government's cooling measures "have created a severe situation for sellers", Centaline Property managing director Louis Chan Wing-kit said. "Some have waited for up to 40 days to clinch a deal, so now they feel they need to lower prices."

When market sentiment is positive it is not uncommon for deals to be done within 24 hours. The turnaround follows a 23 per cent rise in prices for second-hand flats of small and medium size last year.

About a tenth of owners were now willing to cut their asking price by 5 per cent to 10 per cent to get a sale, Chan said. After some cut prices, sales rebounded slightly but still remained at a very low level. "It is still a very quiet market and more sellers are likely to cut prices as they discover no one is coming to view their flats, or those who do come look but do not buy."

In the week ending April 7, 82 flats sold on the 50 private housing estates monitored by Ricacorp Properties, up 39 per cent on the ultra-low level of 59 transactions the previous week in the aftermath of the latest cooling measures, but well below 2012's average of 245 sales per week.

Ricacorp director David Chan said some sellers had cut prices because of fears of a bird flu outbreak and the North Korea situation. But in Shanghai, the epicentre of the latest bird flu outbreak, analysts said real estate sentiment had not been affected.