Few takers for latest batch of flats at Hong Kong’s cheapest residential project this year
Only 12 of the 30 flats on offer at Sun Hung Kai’s Park Yoho Milano project in Yuen Long were sold on Sunday
Less than half the flats on offer at a residential project in Yuen Long were sold on Sunday where a few buyers forfeited huge deposits deals last week, with analysts pointing out that investors are having second thoughts amid rising mortgage rates, US-China trade war, struggling stock market and government measures to cool runaway prices.
Sun Hung Kai Properties, the largest developer in Hong Kong, sold only 15 of the 30 units on offer at Park Yoho Milano in the northern Yuen Long district, according to Midland Reality Agency. Last Wednesday five buyers cancelled their agreements foregoing nearly HK$2 million to terminate the sales.
The five flats whose sales agreements were cancelled were not included in Sunday’s sale.
Another project, City Hub in To Kwa Wan in Kowloon, jointly developed by Bonds Group of Companies, Chevalier Group and the Urban Renewal Authority, fared even worse. Only one unit measuring 338 square feet was sold for HK$8.1 million (US$1.03 million), according to Midland Realty.
“It is definitely not good, but not too bad either as the project has already done several sales rounds,” said Sammy Po Siu-ming, chief executive of Midland Realty’s residential division, adding that it also faces competition from other projects.
“But most importantly, the ongoing US-China trade war has led to a lot of uncertainties in the stock market and that has spilled over to the property market now.”
The project debuted last month and was seen as the cheapest residential project this year. At the end of last month, Sun Hung Kai put 108 units at its Park Yoho Milano development on the market at an average price that was 10 per cent lower than those of secondary homes nearby.
The average prices for the latest batch at Park Yoho Milano was HK$15,548 per sq ft after discounts of as much as 16 per cent. The flats, with areas ranging from 254 sq ft to 909 sq ft, are being offered for HK$4.75 million to HK$14.29 million after discounts.
The developer last week said it had sold 440 flats – or 80 per cent – of the 538-flat development for HK$3.5 billion.
Sun Hung Kai has cut the prices of its projects twice in less than a month, which shows the red hot property markets is starting to cool down.
The company last Wednesday put on sale 119 units at its Cullinan West II development atop Nam Cheong MTR station in Kowloon at an average price of HK$23,893 per sq ft after discounts, about 10 per cent lower than a previous batch that went on sale in December.
The latest data from broker Ricacorp Properties showed that 15 per cent fewer new home sales contracts were signed in July than in June, while they were down 7 per cent for secondary homes.
And although the median house price in the city has risen for 27 consecutive months until July, UBS has predicted prices will tumble as much as 10 per cent from this month to the end of 2019, while Citibank has forecast a 7 per cent fall in the second half of this year.
“The trade war between the US and China has hurt the stock and property market sentiments,” said Thomas Lam, senior director at Knight Frank. “Most of homebuyers are employees. If the trade war were to hurt economic development and lead to a rise in unemployment, it would affect property sales.”
Owning a home in the world’s most expensive property market just got tougher as banks raise mortgage rates
Lam said the increase in mortgage rates, which have risen by 10 basis points, will also have a slight psychological impact on the property market as it adds a few hundred dollar extra to monthly payments every month.