Hong Kong property

Housing market shows no sign of cooling down as K Wah’s Solaria flats get overwhelming response

As many as 8,400 buyers submitted bids for 238 available units, even after the developer set a 24 per cent price premium over projects in the neighbourhood

PUBLISHED : Saturday, 02 June, 2018, 7:45pm
UPDATED : Saturday, 02 June, 2018, 11:30pm

K Wah International Holdings received 8,400 bids for the 238 units available at its Solaria project in Tai Po over the weekend, an overwhelming response that underscored Hong Kong’s buoyant residential property market, where average monthly prices had risen for 25 consecutive months.

More than 100 of the 238 units were sold as of 5pm on Saturday, even after K Wah set the offer price at a 24 per cent premium over comparable projects in the neighbourhood, sales agents said.

The entire offer is expected to sell out by the end of Saturday, and the developer is likely to launch more units for sale soon, said Sammy Po Siu-ming, chief executive of the residential division at Midland Realty.

An average of 35 bidders queued for every available unit of Solaria, with their names going into a ballot. Bidders for single units stood a 20 per cent chance of a purchase, whereas customers seeking two units or more had an 80 per cent chance of success, Po said.

One such buyer, who wasn’t identified, paid a combined HK$25 million (US$3.2 million) for three apartment units, both for self-use and as investment, agents said.

K Wah is the first developer to commence selling in Tai Po, where a 3,000-unit community is under construction in this north-eastern corner of Hong Kong.

The 238 units today were the first batch of Solaria’s 1,122 flats at Pak Shek Kok. Prices start at HK$4.62 million for a 225-square feet (21 square metres) studio, or HK$16,498 per square foot after an 18.5 per cent discount, the developer said. A larger, three-bedroom unit is available at HK$13.92 million, after discounts.

The average price is 24 per cent higher than the prevailing price at the six-year-old Providence Bay, and 11 per cent higher than the three-year-old Mayfair by the Sea project in the same neighbourhood, according to Centaline Property Agency’s data.

According to the mortgage plan offered by Mreferral Mortgage Brokerage, property buyers can receive a 30-year term mortgage for up to 80 per cent of the sales value at 1.2 percentage points above the prevailing Hong Kong interbank offered rate (Hibor), at 1.03 per cent per month as of June 1. The mortgage is capped at 2.15 per cent, shielding borrowers in the event that the Hibor rises.

The mortgage rate will also be capped at 3.1 percentage points below prime rate, which now stands at 5.25 per cent.

Developers’ discounts, and aggressive ceilings on mortgage rates explain why property prices in Hong Kong - the world’s most expensive urban centre to live and work in for three years running - continue to soar despite government plans to cool the market. The city’s Chief Executive Carrie Lam Cheng Yuet-ngor had made affordable housing a major priority in her administration.

The insatiable demand has driven prices higher, with the city’s average home price rising 12 per cent in the first five months of 2018 to HK$14.5 million, according to Midland’s data.