More than 100 flats sell in 90 minutes after Cheung Kong offers first-time buyers 90pc loans
A new mortgage offer - made in the wake of recent government moves to cool Hong Kong's red-hot property market - saw more than 100 flats put up for sale by the city's biggest property developer sell in less than two hours yesterday.
However, sluggish demand for other properties appeared to show that measures aimed at cooling the runaway real estate market were having an effect.
The 108 flats, half of Cheung Kong's La Lumiere development in Hung Hom, sold out in 90 minutes, according to executive director Justin Chiu. The company offered first-time buyers loans covering up to 90 per cent of the price, a direct counter to monetary tightening aimed at tamping down that demand.
"Some buyers may have difficulty getting mortgages," Chiu said. "We will help out with that as much as we can."
Given what Chiu called "very strong demand" for the new homes - which averaged 430 sq ft - Cheung Kong plans to release at least 20 per cent of the remaining stock within the next few days. He also said that prices would likely be raised.
Other properties that hit the market yesterday saw much lower demand. Kerry Properties released 100 units at its luxury project, Dragons Range, in Sha Tin but sold only 11, sources said. Kerry also offered a second mortgage plan but one that covered only 80 per cent of the price. Kerry Properties is controlled by Kerry Group, the controlling shareholder of the SCMP Group, which publishes the South China Morning Post and the Sunday Morning Post.
In Tung Chung, Nan Fung Development sold 166 units of the 315 put on sale at The Visionary.
"There was more focus on [Cheung Kong's] mortgage deal," said Alex Yeung, senior account manager at Centaline Properties in Sha Tin. "But the size of the homes was also a factor."
The Dragons Range units were more than double the size of those at Cheung Kong's La Lumiere. Yeung said there was stronger demand for smaller, cheaper homes in Hong Kong.
Cheung Kong has faced off with regulators over the past two weeks after the Hong Kong Monetary Authority (HKMA) stepped in to cool the property market.
On February 27, HKMA lowered the cap on the loan-value ratio for homes under HK$7 million to 60 per cent from 60 to 70 per cent, forcing buyers to pay more up front for new homes.
Just days later, Cheung Kong and mortgage broker mReferral countered that move by offering first-time buyers loans covering up to 90 per cent of homes at the Hung Hom development.
That pushed HKMA to further tighten the rules on additional mortgage finance, requiring that the maximum debt-service ratio be applied not only to mortgage loans, but to the total liability of the applicants, including any additional mortgage financing from other sources.
"The mortgage plan is attractive. That's one reason why demand was strong," said Sammy Po Siu-ming, the chief executive at Midland Realty's residential department. "Some demand will go from the first-hand market to the second-hand market."