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PropertyHong Kong & China

Sales in Hong Kong secondary home market rise as primary releases evaporate

PUBLISHED : Wednesday, 15 May, 2013, 12:00am
UPDATED : Wednesday, 15 May, 2013, 3:06am

Secondary home sales in Hong Kong climbed significantly last week after the introduction of a new law on the marketing of primary projects led to a decline in the supply of new flats.

Data from Ricacorp Properties showed that for the week ended May 12, 176 second-hand flats were sold in the 50 largest private housing estates it monitors, up 24 per cent from 142 sales the previous week.

"Under the new ordinance, the market fell short of new project launches, hence the secondary flat market caught attention again," Ricacorp director David Chan said.

"In addition, some owners gradually lowered prices in order to get their flats sold. This boosted buying sentiment and stimulated sales significantly in some popular estates."

The weekly figure is the highest in more than three months since the government introduced more tightening measures to cool soaring home prices in late February.

Midland Realty's sales index, which tracks weekly sales at 35 private housing estates, rose 68.4 per cent to 96 transactions between May 6 and 12, up from 57 sales in the previous week and the highest in 15 weeks.

The activity in the secondary market was in sharp contrast to sales in the primary market, where only two flats in Swire Properties' Dunbar Place in Ho Man Tin sold at the weekend, according to a report from BNP Paribas. Five flats at Dunbar Place sold the previous weekend.

BNP property analyst Patrick Wong Chi-leung said the lack of primary launches turned buyers' focus to the secondary market. Also, more owners were willing to lower their asking prices further to attract buyers, particularly in such estates as City One Shatin and Kingswood Villas.

The latest prices at both estates are about 6 to 8 per cent below prices achieved before the latest round of new measures in February.

"We expect pent-up demand, mainly from first-time buyers, to support the rebound of secondary volume," Chan said.

The Residential Properties (First-hand Sales) Ordinance, aimed at protecting buyers from dishonest sales practices, came into force on April 29.

Analysts said it had affected the launch of new projects as developers needed time to adjust their sales plans and prepare marketing materials that complied with the new regulations.


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[Analysts said it had affected the launch of new projects as developers needed time to adjust their sales plans and prepare marketing materials that complied with the new regulations.]

Well, then either those analysts are plain stupid, or the developers are. The referenced Residential Properties First-hand Sales Ordinance was first introduced to LegCo as early as March 2012. After the usual horse trading, its final version was passed and formally announced in early February of 2013. Developers had three full months to update their materials, which really is mainly a publishing job, since all the relevant information (like gross sq footage) was already available, even under the old regulation, it was just possible to bury it in the small print on page 10, and blast out a bunch of much more favourable 'facts' on the cover.

It is just an excuse for what the developers are really doing: supply hoarding. The government controls the land supply, but they control the timing of that land being developed, and of the apartments coming to market. They see that the government has effectively stamped out a lot of the demand through the various cooling measures, and now they are tampering with the supply to avoid more pronounced price drops. That is a game they can play for a while, but not forever. Sooner or later, the pent-up supply will come to market and help to drive prices down. It is just a matter of which developer will blink first.
They are doing it because they know it works. They hold back supply but also slow down new building starts. Thus inventory will stay roughly static and zero sales.
This then builds up demand due to the 140,000 people getting married each year (70,000 new families), and people having kids etc.. Who want to upgrade. They will then sell 17,000 homes to a market requiring 20,000 homes.
Supply is 3,000 lower than demand = profits maintained.
They are just buying time because the market condition is not good.
What a good excuse to say "hey I am not listing anything because I have been told 3 months in advance that I will have to distribute revised copy of brochures".
Just wait and see.... Its the mainlanders who are buying up most of these new flates once the chinese economy starts to falter which it will cus nothing rises for ever all the 97 and 03would return.been 6 years already sicne the last time property fell. so it is just a matter of time


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