Sales of luxury homes fell to a five-year low last month as Hong Kong’s property market continued to reel from the ongoing civil unrest, extending a decline that started in June. Only 93 new and used homes worth more than HK$20 million (US$2.55 million) each were sold, totalling HK$4.68 billion in September, according to figures compiled by Centaline Property Agency. Sales dropped to the lowest since June 2014 when they hit HK$3.64 billion. They have plummeted 78.4 per cent from HK$21.62 billion in May and were 63.3 per cent lower compared to HK$12.76 billion in September 2018. The number of transactions, meanwhile, was the lowest since 72 deals were finalised in February 2016. Transactions have plunged 79.4 per cent from 451 in May and were 68.2 per cent lower compared to 292 in September last year. “I think it is because of the recent political situation, so people would like to wait and see,” said Patrick Chau, senior director and head of residential investment at Savills. “Those [interested in homes worth] between HK$20 million and HK$100 million really count on mortgage ... These people [tend to be] more conservative.” Wong Leung-sing, senior associate director of research at Centaline, said that Chief Executive Carrie Lam Cheng Yuet-ngor’s move to relax mortgage restrictions in her policy address last week was aimed at first-time buyers and was unlikely to benefit the segment. Housing policy cushions Hong Kong’s property slump, adding US$3 billion to wealth of city’s six richest real estate tycoons The price index of used homes larger than 1,722 sq ft fell 2.9 per cent from May to August, according to figures from the Rating and Valuation Department. The Centa-City Leading Index of larger homes meanwhile declined 1.6 per cent from September to October 13. Savills’ Chau said some of the potential buyers of luxury homes might be among those mulling emigration as the increasingly violent protests, now in their fifth month, show no signs of ending soon. “[It is possible] those who can buy homes worth HK$20 million to HK$50 million may want to emigrate,” said Chau, adding that volumes were unlikely to see a bottom before the social unrest ends, as the luxury housing market is relatively more sensitive to these events than the mass market. Hongkongers pursue overseas passports and sell homes at huge discounts to fund move as city’s protests rage on Chau noted that the raft of measures announced by Lam in her policy address will help boost sales of mass housing as the loan amounts have been increased and down payments reduced to help first-time buyers. “But the luxury market is more about those who upgrade their homes. They may have more than one home and are more conservative. Traditionally, even when the market is hot, the luxury market is less active than the mass market.” The mass housing market has seen a surge in transactions after the policy address, jumping 2.7 times to 82 deals for the week ended October 20 compared to the previous week, according to Ricacorp Properties. “The relaxation in mortgage restrictions revealed in the policy address has stimulated a number of users to flock to the market, with secondary market turnover surging like a geyser,” said David Chan, director of Ricacorp. “The US-China trade war has reached the first phase of agreement, while first-time buyers can now get a higher loan-to-value ratio for mortgages, purchasing power has been released further.” But Chan cautioned that turnover could diminish as the supply of cheap listings starts to shrink when secondary market homeowners raise asking prices and withdraw listings to wait for higher prices.