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Sandy Li

As asking prices and mortgage rates fall, interest begins to pick up in some estates
Deep price discounting and tumbling interest rates are luring some bargain hunters back to the property market, estate agents say.
They say flats  under HK$1 million or  those that showed price  resilience in the previous property cycle are sought after by bargain hunters.
Taikoo Shing, Grand Promenade and Kingswood Villas are cited as  housing estates in which there is great interest.
Over the weekend, the number of potential buyers viewing flats rose by up to 50 per cent from a week  earlier, agents  said.
The surge was largely  fuelled by lower asking prices and a reduction in mortgage rates from Monday.
But  the bargain hunters' enthusiasm is  not shared by many analysts, who do not  agree with property agents that now is the time to buy.
Researchers at investment banks Credit Suisse and Morgan Stanley  said prices might continue to tumble in the next 12 months, in view of  rising unemployment and the weakening local economy.
Transaction prices at major housing estates had plummeted by between 20 and 35 per cent,  agents said, as credit-starved speculators  were forced to dump their units.
On Monday,  major mortgage lenders, including HSBC and Hang Seng Bank, cut their home loan rates by 25 basis points.
The discounts and lower interest rates have  led to an increase in inquiries in  Taikoo Shing,  which is a regarded as a bellwether of blue-chip housing estates since it is generally the first to show signs of recovery after a market downturn.
Buyers searching for flats priced at about HK$1 million could also begin hunting among units on lower floors, agents said.
'Units without spectacular views will be less resilient to price declines at a time of souring investment sentiment,' said Eva Wong  Yee-wah, a senior sales manager at Hong Kong Properties' Taikoo Shing branch.
If lower prices  were top priority, Ms Wong said a 580 square foot unit at Tsui Woo Terrance Terrace -  close to  Lei King Wan - is on offer for just HK$2.6 million or HK$4,482 per square foot.
Over the past weekend, she  said, her  branch had helped a buyer to purchase a 691 square foot unit for HK$2.98 million, or HK$4,324 per sq ft, about 17 per cent below prevailing transaction prices  for units of this size.
Sai Wan Ho's Grand Promenade -  a newer estate that was  popular among speculators two or three years ago - was  now back on investors' radar screens, agents said.
'This month, three out of five units that were sold came with existing  leases,' said Alex Yau Pang, a senior district manager at Midland Realty's Grand Promenade branch.
Such units were particularly popular among investors looking for yields of between 3 and  4 per cent instead of parking their money at banks, he said.
A 687 sq ft unit in the  complex was  being offered at HK$3.4 million and came with a lease  at a monthly rental of HK$18,500.
The owner had bought the unit at HK$3.88 million, said Mr Yau.
A week ago, a 689 sq ft unit  leased out at HK$14,500 a month sold for HK$3.2 million, he said.
'About 10 per cent of some 600 units now on sale in the secondary market in Grand Promenade will be released at discounts if buyers can offer immediate payment,'  said Mr Yau.
Alex Wong King-ho, a sales manager at Ricacorp Properties' Kingswood Ginza branch, said  transaction prices at Kingswood Villa now ranged between HK$1,500 and HK$1,750 per square foot, while some lower-priced units were on offer for as little as HK$1,400 per square foot.
A 581 sq ft unit at the housing estate was sold for HK$910,000 through Ricacorp, while Midland helped a buyer to  purchase a 708 sq ft unit for  HK$980,000 last week.
'Some buyers have been lured to withdraw their bank savings to invest in less volatile property again, since prices have fallen to attractive levels,'  said Mr Wong.
The buyer of the HK$910,000 unit needed to make a monthly mortgage payment of  less than HK$3,000 after obtaining a 70 per cent mortgage loan on the property at a rate of  5 per cent, he said.
'But that unit can easily be leased for HK$4,000 a month,' he pointed out.
The aggressive buying came as Morgan Stanley  said last week that Hong Kong residential prices  could drop about 20 per cent over the next 12 months and a further 10 per cent over the subsequent 12 months.
The US bank said it expected the luxury segment to be even more vulnerable, as average selling prices  had risen 50 per cent more than those in the mass market  from the  Sars trough to their peak this year, and buyers in the luxury segment  were likely to have been more badly hit  by the volatile stock markets.
'We do not expect a meaningful residential recovery until 2011,' it said.
In the light of  anticipated negative economic growth and an unemployment rate at 5.5 per cent, Credit Suisse further slashed its forecast for residential property prices for next year to a drop of 30 per cent from  current levels,  as against 20 per cent previously.
The expected 30 per cent further decline, the Swiss bank  pointed out,  would take property prices back to levels last seen in March 2004.



Discounts luring bargain hunters