If Hong Kong property market enters downward cycle, we will consider easing measures, says monetary authority chief
- The developer has priced the first batch of units at its Kwun Tong property at 14 per cent less than homes in the district
Hong Kong’s property market is not in a downward cycle yet, Norman Chan Tak-lam, chief executive of the Hong Kong Monetary Authority, said on Tuesday.
“If the property market enters a downward cycle, the HKMA will consider gradually easing current measures,” Chan, who was leading a Hong Kong Association of Banks delegation, said in Beijing.
He added that the city was entering an interest-rate increase cycle, but not all banks would follow with their own increases. It was down to commercial banks whether to follow – and by how much – a potential rate increase by the US Federal Reserve next week.
Chan’s comments came after Chief Executive Carrie Lam Cheng Yuet-ngor said on Monday the Hong Kong government would not use public money to bail out the housing industry.
“Don’t count on the government rescuing the [property] market,” Lam said during the Hong Kong Economic Journal’s Economic Summit 2019 conference in Hong Kong. “The downward adjustment has not even offset the increase at the beginning of this year.”
How the market responds to the sale of Hong Kong developer Sino Land’s Grand Central residential development could signal which way the sector will go.
Sino Land said it had received 6,500 subscriptions by 8pm on Tuesday for the upcoming sale of 488 flats at Grand Central in East Kowloon, which will be sold at a discount amid the current property price slump.
The initial batch of units of the property in the Kwun Tong district will be sold at a starting price of HK$15,532 (US$1,987) per square foot, or HK$7.3 million for a 452 sq ft flat.
“It is very likely that buyers will snap up all the flats on the first day,” said Sammy Po Siu-ming, chief executive of the residential division at Midland Realty.
“Many potential buyers have been waiting for developers to lower prices for months, and finally the chance has arrived.”
A first day sell-out of the units will boost sentiment in Hong Kong’s property market where sales are slumbering and recent launches saw take-up reaching at best 30 per cent of what was offered.
On Saturday, the sales launch of the T Plus project in Tuen Mun was forced to close early when only two out of 27 units of 130 sq ft flats were sold.
Property agents said the 1999-unit Grand Central received keen response from potential buyers when the first price list for 205 units at an average price of HK$17,388 per sq ft, 14 per cent cheaper than that of lived-in homes in the neighbourhood, was released last week. Sino Land then offered another 283 units at similar prices.
The sales would be seen as a testing ground to whether a lower price approach can boost transactions in the current downturn.
“If the sales are as good as expected, more developers, particularly those with heavy stocks in the pipelines, will consider being less aggressive and set a lower price to lure buyers,” said Ricacorp Properties’ research head Derek Chan.
The median cost of live-in homes has dropped by 3.7 per cent since August, as the city ended 28 consecutive months of ever-rising prices as rising mortgage rates, a proposed “vacancy tax”, and an escalating US-China trade war to weigh on the city’s home prices.