Hong Kong developers face fresh pressure to sell as completed new units jump 30 per cent in third quarter
- Private flat completion stood at 6,500 in the July-through-September period, up from 5,000 in the previous quarter, the government said.
New flats have been quickly rolling off the Hong Kong assembly line, recording a 30 per cent jump in the completion rate in the July-to-September period, adding pressure on developers to speed up sales ahead of an expected vacancy tax to deter hoarding.
Private flat completion stood at 6,500 for the three months, up from 5,000 in the previous quarter, according to data from the Transport and Housing Bureau released on Friday.
This equates to a total supply of 12,700 new private flats in the first nine months of the year.
“Competition for buyers will further escalate because developers are getting impatient to cash in on their projects as market sentiment continues to sour,” said Derek Chan, head of research at Ricacorp Properties.
This month, as of October 24, 2,009 new flats had been sold. That was 59 per cent higher than the 1,263 deals in all of September, according to data from Midland Realty.
Developers have been scrambling to ink in deals, offering flats at lower prices to try to attract buyers at a time when mortgage rates are rising, the city’s stock market is in the doldrums and the US-China trade war is being felt by large and small businesses.
The developers are trying to clear out stock ahead of a vacancy tax – expected to be approved next year – that would make completed homes left vacant for more than six months after receiving an occupation permit liable to a levy of about 5 per cent of the property value.
On Thursday, Chuang’s China Investment got a chilly reception from prospective buyers, selling only 35 per cent of 175 units offered at The Esplanade in Tuen Mun.
“Developers are under pressure to price their units at competitive prices if they want to sell fast,” Chan said.
Hong Kong home prices slipped in August for the first time since March 2016, a fresh sign that the property market could be heading for a prolonged downturn after a strong bull run.
The government’s new data showed construction starts on private residential developments fell 79 per cent to 1,900 units in three months ended September from 9,000 in the previous quarter.
Overall this year, construction starts are up: Construction starts were 16,500 in the first three quarters, up 77 per cent from 9,300 in the corresponding period last year.
“Figures on commencement of construction are fluctuating every quarter. It will not have a bigger impact in the property market unless construction starts on private flats continue to fall for several quarters,” said Wong Leung-sing, a senior associate director of Centaline Property Agency.
Centaline Property Agency expects the completion of new flats will rise to a 10-year high to 22,085 units in 2018.
“The figure is based on our updating with developers’ schedule of securing occupation permits,” Wong said.
According to government figures, 9,000 private housing units that have secured an occupation permit are unsold.
But Wong of Centaline estimates that the number of unsold flats, which were completed this year or before, has dropped to 8,341 units.
“The fall is mainly due to the government’s introduction of vacancy tax, which has pushed developers to sell down their completed unsold flats,” he said.
The bureau projects that Hong Kong’s supply of new private flats will reach 93,000 over the next three to four years.