21-year high – Hong Kong property sales expected to touch US$51 billion in first six months this year
Vacancy tax and potential interest rate increases spark buying spree
Property sales in Hong Kong are expected to touch HK$400 billion (US$50.96 billion) – a 21-year high – in the first half this year, as one after another homes, office towers and parking spaces set records in the world’s most expensive real estate market, according to Centaline Property Agency.
“People are optimistic about robust economic development in the city, and we expect sales to continue to grow,” said Wong Leung-sing, associate director of research at Centaline Property.
Sammy Po, chief executive of Midland Realty, another Hong Kong brokerage, however said the “panic buying” was the result of an acute land shortage. “People are worried that if they do not buy now, they will not be able to afford [the property] later,” he said. “It will continue unless the government can boost land supply.”
The record for the first half of the year was reported in 1997, when property transactions hit HK$483.58 billion.
Centaline Property estimates the total number of deals will be around 46,500 by the end of this month, 13.5 per cent higher than the second half of 2017, a record high since 2014. The sales of private new residential property alone are forecast to touch 2000 deals worth HK$27.5 billion this month, the highest level recorded in the past 14 months, according to the agency.
Midland Realty, on the other hand, said it anticipated that 2,500 new flats would be sold in the city in June.
About 10 new projects are expected to go on sale in July. “In the second half, sales will continue to see increases, but the pace of growth will be slower, when you factor in the new vacancy tax and any potential interest rate increases,” said Centaline’s Wong.
The prices of used homes rose for 25 straight months up till April, according to data from in Hong Kong’s Rating and Valuation Department, and property agents have raised their price growth forecast for the whole year to about 15 per cent from 10 per cent.
The expected increases in prices, as well as the latest wave of buying of homes, have added to the mounting pressure on Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor’s administration. Among other measures, the government is set to introduce a vacancy tax on empty flats, which it said would be finalised by July, as it tries to rein in runaway home prices.
Midland’s Po, however, said: “Unless the tax is high enough, say 14 to 15 per cent, or is added to lived-in homes as well, I cannot see much impact on the market.”
On Saturday, all 119 units on offer were sold out at Henderson Land Development’s Cetus Square Mile project in Mong Kok.
A parking space at Sun Hung Kai Properties’ Ultima apartment complex in Kowloon sold for HK$6 million, or HK$44,444 per square foot, this month.
In April, the top floor at 9 Queen's Road Central sold for HK$514.2 million, or about HK$60,000 per square foot, making it the most expensive office space in the city.