With few takers on the property market, jittery individual owners cut prices by up to HK$800,000
Hong Kong’s property market is coming under stress.
Jittery individual owners, aware of the risks from rising mortgage rates, turbulent stock market and weakening economic outlook, are offering massive price cuts as they expect sentiment to sour further.
Even developers, after cutting prices of brand new flats, have seen a marked decline in buying enthusiasm.
In Tin Shui Wai in the New Territories, a 544 square feet, three-bedroom flat at Kingswood Villa, was sold for HK$5.48 million (US$700,000) on Sunday, after the owner cut the price by HK$820,000, or nearly 13 per cent, from the initially quoted HK$6.28 million.
A 375 sq ft unit at Amoy Garden, in Kowloon Bay changed hands for HK$6 million against its asking price of HK$6.8 million, Midland Realty said on Sunday.
“The owner reduced the price four times, dropping it by HK$800,000 before finding a buyer,” said Ricky Wong, senior sales manger at Midland Realty’s Kowloon Bay branch.
Richard Lee, chief executive at the real estate agency Hong Kong Property, said that investors have started to sell down their portfolio.
“Investors are more sensitive to higher borrowing cost and negative market sentiment,” Lee said. “In general, owners are willing to cut their asking prices by 10 per cent. The market is unlikely to see any big improvement over the next three months.”
Meanwhile, sales of homes on the secondary market dropped to a 13-month low in September.
There were 125 transactions recorded in 10 major housing estates last month, 27.3 per cent fewer than August, according to data from Midland Realty.
Month-on-month volume declined 22.6 per cent to HK$1.14 billion in September.
“Home seekers have stayed on the sidelines after the government announced six housing policy measures in June to cool the market. Flat sales on the secondary residential market turned even quieter as developers sped up their new project launches at discounted prices,” Midland said.
Chief Executive Carrie Lam Cheng Yuet-ngor is likely to announce land reclamation plans to increase supply of affordable housing when she delivers her policy speech on Wednesday, which is likely to affect immediate demand.
On Sunday Lai Sun Development could manage to sell only five out of 12 units at its Monti project in Sai Wan Ho despite reducing prices by 10 per cent.
The poor response comes after a new project in Tuen Mun in the northwestern New Territories saw disappointing sales on Saturday.
Homebuyers snapped only 181 of 310 flats at Vanke Property (Hong Kong)’s Le Pont, even after advertising discounted mortgage rates and cash rebates to drum up sales.
Le Pont is one of the first projects to be launched after Hong Kong banks raised benchmark lending rates for the first time in 12 years by 12.5 basis points on September 27, effectively increasing the cost of mortgage repayments.
Last Thursday, 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 US-China trade conflict and the likelihood of further interest rate rises.