Hong Kong homebuyers – spooked by recession, talk of national security law – forfeit US$1.5 million in deposits, walk away from purchases

Nineteen Hong Kong homebuyers who put down deposits for flats at the height of a market rally around June 2018 have walked away from their purchases, forfeiting as much as HK$11.83 million (US$1.53 million) and HK$12.4 million in two instances over the past month.

Nine buyers walked away from Hong Kong developer K Wah International’s Solaria project in Tai Po district, forfeiting the HK$11.83 million on Friday, according to the project’s Register of Transactions.

The second instance, of 10 forfeitures, was reported from Solaria on April 29. Altogether, more than 100 homebuyers have walked away from their purchases so far this year, according to reports.

Hong Kong’s economy has taken a battering since the heydays of June 2018. The year-long US-China trade war, the city’s anti-government protests and the novel coronavirus outbreak have all taken their toll, pushing the city’s economy into recession over two quarters of economic contraction. The proposed introduction of a new national security law by Beijing, announced at “Two Sessions” last week, has added to the turmoil by sparking fears about market stability.

Centa-City Leading Index, Centaline’s timelier price index for used homes, has declined about 5 per cent between June 2018 and now. It has dropped about 6.8 per cent since June 2019.

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“The flats were bought less than two years ago. Some buyers might have problems with mortgages and funds,” said Ray Au, senior principal district sales manager at Centaline Property Agency. “Some might be more pessimistic about market prospects.”