Developers and banks have launched more than 20 special packages, flexible payment terms or sweeteners to boost sales in the depressed market. These packages include low fixed-mortgage rates in the first several years, exceptionally high cash rebates, no down-payments for purchases, preferential second-mortgages with no repayment obligations initially and other lures. With additional sweeteners on offer but prices not rising, special packages mean lower effective prices. Centaline Property Agency managing director Shih Wing-ching said a 25 per cent mortgage without repayment obligations in the first four years could translate into a 4.75 per cent cut in price at present interest rates. He agreed that one reason for offering sweeteners instead of cutting prices directly was to avoid creating shocks to the fragile market. With prices at a nine-year low and mortgage rates at 20-year lows, many analysts believe the only reason why people are still not buying is lack of confidence. Many developers believe this is the case and are eager not to emphasise the true variations in prices. One developer admitted it would cut prices on purchaser demand, especially when packages did not suit a buyer's circumstances. For example, by subsidising mortgage instalments in the first two years, developers will receive 12 per cent to 13 per cent less in sales proceeds. But purchasers cannot enjoy the same amount of benefits because stamp duties are taxed on the higher 'nominal prices'. Despite offering price cuts on request by buyers, developers stick to advertising their packages, not price-cuts. 'In a property boom, we advertise prices in term of cash payment [because prices appear to be lower]. Now, we would rather advertise prices in staggered payments [because they appear to be higher],' said a developer. Packages also have advantages over price discounts in some aspects. Landscope Surveyors managing director Koh Keng Shing said flexible packages could unlock potential buying power which otherwise would not be present in the market. Some buyers were motivated by low interest rates despite having insufficient savings, he said. 'For these people, a 10 per cent cut in price can only lower the 30 per cent down-payment from, say, HK$300,000 to HK$270,000. This makes no difference,' he said. Zero down-payment packages would help, said Mr Koh. Some people were attracted by low prices but felt uncertain of economic prospects and would prefer low instalments in the first three to four years, with a belief the economic climate would then improve. He said property sales packages were set to proliferate with economic development. To a certain degree, packages do fulfil their mission in luring new kinds of purchasers, including investors, according to analysts. Launching the first 25 per cent second mortgage without repayment obligations in the first four years, Cheung Kong (Holdings) has secured 40 per cent of its purchasers of Laguna Verde phase four in Hunghom. Sun Hung Kai Properties followed suit in its The Belcher's in Kennedy Town. Sino Group offered Island Resort buyers 2 per cent, fixed-rate mortgages for the first four years.
