Hong Kong’s desperate homeowners slash prices by 20 per cent after unprecedented violence on National Day
- Market observer says Tuesday’s violence prompted sellers to lower prices
- Overall property transactions in Hong Kong fell 14 per cent month on month to a three-year low of HK$36.4 billion in September, according to Midland Realty
There are signs of further softening in Hong Kong’s property market. Homeowners are slashing prices by more than 20 per cent as buyers are reluctant to commit to big purchases and banks reduce the valuation of properties amid increasingly violent protests.
On Tuesday, an 18-year-old student was shot by police in Tsuen Wan. Tsang Chi-kin was one of many injured in the violence that spread across the city, as thousands took to the streets as part of demonstrations on National Day.
“[Homeowners] want to cash in and think holding cash would be safer,” said Fanny Chiu, chief senior sales manager at Hong Kong Property (Services), adding that Tuesday’s violence had “definitely” prompted sellers to slash prices.
“Potential buyers also said they wanted to see what would happen on October 1 to decide whether to buy or not,” said Chiu, noting that the current sentiment is acutely bearish.
Hong Kong’s lived-in home prices see steepest decline of the year as protests, trade war persist
On Wednesday, the owner of a 378 sq ft flat at La Cite Noble in Tseung Kwan O lowered the asking price by 7.1 per cent, from HK$7 million (US$892,700) to HK$6.5 million.
A day earlier, a 919 sq ft flat at Lake Silver in protest-hit Ma On Shan sold for HK$13 million, after the price was slashed by HK$3.3 million, or 20.2 per cent.
Banks too have been cutting valuations of used homes. HSBC recently reduced the valuation of a 548 sq ft flat at Kingswood Villas in Tin Shui Wai by 7.7 per cent to HK$5.65 million.
Figures from the Rating and Valuation Department on Monday showed that Hong Kong’s home prices declined 1.4 per cent in August, the fastest rate this year. The price index for lived-in homes slumped for a third successive month to 389.8.
Meanwhile, overall property transactions in Hong Kong, including new and used homes, parking spaces, offices and shops, fell 14 per cent month on month to a three-year low of HK$36.4 billion in September, according to Midland Realty.
The office sector was not spared either. Only one grade A office unit changed hands in September, the lowest since the 1997 financial crisis, according to Midland IC&I.
“Hong Kong’s political crisis has not been settled and the global economy is gradually deteriorating [so] investment sentiment is extremely negative,” said Eric Ong, chief operating officer and director of commercial department at Midland.
He said that office property owners were not making large enough cuts to prices, reducing the turnover of offices down to a trickle.
Most expensive Kai Tak project launch meets tepid demand amid market hit by protests and trade war
The combined vacancy rate of offices in traditional business districts, which includes Central, Wan Chai-Causeway Bay and Tsim Sha Tsui, rose above 3 per cent for the first time in five years in August because of weakening leasing demand, according to JLL.
Separately, government data on Wednesday showed that the protests were taking a toll on the city’s retail sector. Sales in August plummeted 23 per cent to HK$19.4 billion, marking the seventh month of decline and the largest on record.
