Hong Kong’s new flat sales rise, but demand to fall way short of the projected 30,000 units to be launched this year
- New flat sales to reach a maximum of 15,000 units this year, says CGS-CIMB Securities
- Developers have 30,000 units that could be launched this year, says Ricacorp
The recent uptake of new property projects in Hong Kong is likely to be short-lived, with full-year sales expected to reach only half of the projected 30,000 homes seen coming on to the market amid an uncertain economic climate, market observers say.
“The recent sell-out [of new homes] is because of the pent-up demand, and we will see that end very soon,” said Jeffrey Mak, property analyst at CGS-CIMB Securities. “With uncertainties that have never been seen before in the city, [sales of] 1,000 to 1,500 units per month [for the rest of the year] would not be bad.”
That works out to around 15,000 units this year, after taking into account about 4,200 new homes sold in the first five months. Based on the projections, this year’s sales could be the lowest since 2013, when 11,046 new flats were sold.
According to Ricacorp Properties’ forecast, developers have 30,000 new flats they can launch this year, having sold a total of 21,108 flats in 2019.
“Developers will slow down the pace and hold back the launch of some of their projects if the market conditions deteriorate,” said Derek Chan, head of research at Ricacorp Properties. “Currently, the good sales that we see are based on a rather conservative pricing strategy.”
Hong Kong’s economy shrank 8.9 per cent year on year in the first quarter, the worst on record, because of the serious and sustained impact of the coronavirus pandemic while unemployment rate has surged to 5.2 per cent for the February to April period, the highest in more than a decade.