July home sales soar to 6-year high as discounts, new projects attract buyers
Transactions in city's primary residential market soar 138pc month on month to HK$26.37 billion, propelling developer shares to 52-week highs
The strategy of using discounts to boost sales has pushed up Hong Kong developers' turnover to the highest in six years and their stocks to 52-week highs as buyers snapped up HK$26 billion worth of new homes this month.
The brisk sales and an upgrade of the property sector by Morgan Stanley yesterday drove up shares of Cheung Kong (Holdings), the city's largest developer by market value, 2.8 per cent to HK$147.20 and those of Sun Hung Kai Properties by 4.4 per cent to HK$112.30. For both blue-chips, it represented a one-year high. New World Development advanced 3.3 per cent to HK$9.54 and Sino Land rose 2.8 per cent to HK$13.40.
"July sales will be the biggest gain in a single month since June 2008," said Buggle Lau Ka-fai, chief analyst with Midland Realty.
The total value of registered transactions in the primary residential market was HK$26.37 billion as of July 28, about 138 per cent higher than for the whole of June, according to a survey by Midland. July's estimated total surpasses the previous record of HK$22.49 billion in June 2008.
Property sales received a major boost as several new projects went on the market. Sino Land's Mayfair by the Sea in Tai Po, Cheung Kong's City Point in Tsuen Wan and The Grand Austin in Tsim Sha Tsui, owned by Wheelock Properties, New World Development and the MTR, were launched on the market.
Sales have been strong mainly because of discounts offered by developers as well as subsidies to cover extra stamp duties in order to offset the effect of the government's doubling of the stamp duty to curb investor demand.
Sino Land associate director Victor Tin Sio-un said the developer pulled in HK$8 billion from the sale of 725 units at Mayfair by the Sea phase one and two.
"We will release the 'special units' when the opportunity arises," he said.
On Monday, Cheung Kong executive director Justin Chiu Kwok-hung said the company generated more than HK$20 billion in revenue by selling 2,500 units and a commercial project in Wong Chuk Hang.
"We are confident of meeting the HK$30 billion sales target for this year," he said.
Chiu remained upbeat on the market outlook, saying he forecast home prices would fluctuate within a 10 per cent band this year.
Morgan Stanley said it expects Hong Kong residential prices to go up by 5 per cent this year as well as next year.
"We believe residential prices have bottomed and should see a moderate uptick in remaining 2014 and 2015," said Morgan Stanley analyst Praveen Choudhary in a report.
Choudhary attributed the positive outlook to the "release of pent-up demand; no US Fed rate rise until 2016 and peaked regulatory risks".
He said he expects Cheung Kong to launch the most flats in the second half, bringing almost 3,000 units to the market, including 1,700 units in Lohas Park phase three. SHKP could also launch more than 2,700 units, most of them from The Wings phase three development and a Tung Chung project.
Vincent Cheung Kiu-cho, national director for greater China at property consultant Cushman & Wakefield, said: "Developers would continue to expedite new launches in the second half as they look to cash in on strong buying sentiment and close the year with strong sales performance."