Hard to find flats priced under HK$4m back on the market as developers court young buyers
Young buyers eager to get on the property ladder can heave a sigh of relief as more flats priced under HK$4 million (US$510,341) are coming on the market.
Kowloon Development on Thursday released the price list for 130 of its 646-unit One East Coast residential project in Yau Tong, in Kowloon. And 10 of these were listed at under HK$4 million.
As homebuyers wait on the sidelines, builders tempt them with special mortgage rates, cash discounts
The units range from 201 square feet to 374 sq ft and are priced between HK$3.9 million and HK$7.7 million, with the average price working out to HK$19,913 per sq ft after discounts.
The flats open for subscription on Saturday.
“This is the lowest price in recent months and the developer is using such attractive pricing to lure buyers,” said Louis Chan, vice-chairman and chief executive of residential division for Asia-Pacific at Centaline Property Agency.
According to Chan, new home prices in Kowloon average over HK$20,000 per sq ft.
The last transaction for a flat under HK$4 million in the neighbourhood was in July when a 443 sq ft former public housing unit at the nearly 30-year-old Tak Tin Estate went for HK$3.9 million, according to transaction data.
Derek Chan, head of research at Ricacorp Properties, said that it has been a long wait for buyers to find flats under HK$4 million.
“Most new flats coming on the market start from HK$6 million,” he said.
The average price of homes on the secondary market in the third quarter was HK$9 million, according to the latest data from Ricacorp.
Analysts see the HK$4 million pricing as important because the Hong Kong Mortgage Corporation provides mortgage insurance schemes to help those who struggle to come up with the 30 per cent down payment on a home. The HKMC allows potential homebuyers to get a loan-to-value mortgage of 90 per cent on homes worth HK$4 million.
This means that buyers only need to put down an initial deposit of HK$390,000 for the cheapest units at Kowloon Development’s new project.
“Such flats are sought after by young buyers who have limited money for down payment and thus developers will put more such affordable flats on to the market to win over them,” said Sharmaine Lau, chief vice-president at mReferral Mortgage Brokerage Services.
The growing pool of affordable flats comes amid the US-China trade war, rising mortgage rates, government measures to cool runaway property and forecasts from banks that predict Hong Kong’s economic growth will slow down this year. All these factors could hit demand and cause prices to fall.
In August, the price index of lived-in homes fell 0.6 point, marking their first decline since March 2016. Ricacorp meanwhile expects home prices to drop between 3 to 5 per cent in the last quarter.
On Wednesday, Standard Chartered downgraded its forecast for Hong Kong’s economic growth from 3.8 per cent to 3.6 per cent for 2018, citing the trade conflict and the likelihood of further interest rate rises.
Last Thursday 11 banks, with more than 74 per cent of Hong Kong’s mortgage loans between them, increased their lending, effectively pushing up the monthly repayments on home loans.
HSBC, for example, raised its lending rate by 12.5 basis points to 5.125 per cent.
Meanwhile, Chief Executive Carrie Lam Cheng Yuet-ngor is likely to announce land reclamation plans, which might hit immediate demand when she delivers her policy speech next Wednesday.