Hong Kong reports another dismal sales weekend in Tuen Mun as home market heads for the big chill

Hong Kong’s residential property market witnessed another weekend of dismal sales, as even double-digit discounts could not lure buyers to commit, in yet another sign that the world’s priciest flats have given way to a buyers’ market.

Chuang’s China Investments, which offered discounts of up to 16 per cent for 150 flats of The Esplanade project in Tuen Mun, managed to sell three units at 5:30pm, five hours after the launch kicked off, agents said.

“The market has turned soft,” said Midland Realty’s residential division chief executive Sammy Po Siu-ming, adding that seven units, at most, would be sold by the end of the day. “No one is getting up early to queue, as they know that even if they were to come in at 7:00pm, there would still be enough flats for them to choose from.”

What a difference six months make. Developers were able to sell at least 90 per cent of their property on every sales launch during the first six months of this year.

As many as 20 buyers were bidding to buy every available flat in Hong Kong as recently as May, before the government proposed a vacancy tax in July to force developers to put more apartments on the market. That was also before Hong Kong’s commercial banks finally bowed to rising interest rates and raised their mortgage payments for the first time in a decade.

The combination has had a chilling effect on the city’s housing market, where median prices that rose for 28 consecutive months through August finally reached a plateau.

Prices had fallen by 4 per cent in the past eight weeks, and valuers are expecting a decline of as much as 15 per cent in the next 12 to 18 months, according to Moody’s Investors Service. Developers’ sales weekends have gone from bustling shows to humdrum events, turning in recent weeks into deserted affairs.

“Such poor response has not been seen in the past 10 years,” said Thomas Lam, executive director at Knight Frank.

The Esplanade, located about 20 minutes’ walk from the Tuen Mun subway station in the New Territories, sits beside the Tuen Mun River. Prices start from HK$3.09 million (US$389,700) for a studio apartment of 162 square feet (15 square metres), after discounts. Half of the 150 units on sale were newly released flats, while the other half were previously unsold stock.

The developer had sold 86 of the 371 units in the entire development, for a total sales value of HK$350 million.

“Developers are now trying to sell as many units as possible, instead of hoarding them like they used to” when prices rising after each successful launch, said Po. “They are foreseeing a worsening market.”

Hong Kong’s Chief Executive Carrie Lam Cheng Yuet-ngor, who has made housing affordability one of the top priorities of her administration, is showing no signs of easing the pressure.

“At this moment, it is not appropriate to relax any demand-side management measures,” said Secretary for Transport and Housing Frank Chan Fanhe in the city’s Legislative Council last week. “Otherwise we would be sending a wrong signal to the market, and seeing it heat up again.”

The Hong Kong Monetary Authority would maintain its loan-to-value ratio for mortgages, while the four different stamp duties introduced over the past eight years would also be kept, Chan said.