Hong Kong’s home sales fizzle for a second weekend ahead of key policy address expected to boost supply of affordable homes

CK Asset and Sun Hung Kai Properties sold 65 of the 303 units on offer in two projects as of 9pm, an agent said
The lacklustre result comes as Chief Executive Carrier Lam is due to deliver her annual policy address on Wednesday and the index of second-hand homes tumbled in August

Carrie Lam policy address 2020

Zhang Shidongin Shanghai

Published: 4:07pm, 10 Oct 2020

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Hong Kong’s weekend home sales sputtered as buyers remained cautious ahead of Chief Executive Carrie Lam Cheng Yuet-ngor’s annual policy address next week, expected to increase land supply for affordable housing to rein in one of the world’s most expensive property markets.

In the two projects that were on offer on Saturday, CK Asset Holdings sold 59 out of the 285 units at the Sea To Sky project at Lohas Park in Tseung Kwan O, while Sun Hung Kai Properties (SHKP) sold six out of the 18 flats at Mount Regency in Tuen Mun as of 9pm, according to Sammy Po, chief executive of the residential division of Midland Realty.

There are signs that property buyers “are more and more reluctant to negotiate” or settle for more over catalogue prices, which compels developers to cut prices if they want to find willing buyers, Po said.

The slump extends the disappointment of the September 26 weekend, when investors turned their backs on the biggest combined launch of 726 flats by six developers. CK Asset, SHKP, Henderson Land Developments and others managed to sell only 40 per cent of the flats on offer. At the Sea to Sky, only 68 of 285 apartments on offer found buyers.

Two continuous weekends of lacklustre sales underscores the challenges faced by Hong Kong’s real estate market, as the city’s worst recession on record gave buyers cause for pause, while an oversupply of flats released before the coronavirus pandemic earlier in the year remains mostly unsold. Hong Kong’s index of second-hand houses fell 1.1 per cent in August, its biggest drop in six months, extending the declines to 4.1 per cent from the May 2019 record.

“Prices may stabilise in the short term, despite the decline in the housing price index,” Po said.

Prices at Sea to Sky started from HK$7.09 million (US$914,223), going up to HK$20.4 million for the biggest units, while Mount Regency’s prices ranged between HK$5.9 million and HK$9.3 million.

When CK Asset began selling Sea to Sky in June, it was the costliest launch of a property project in the Tseung Kwan O neighbourhood, with prices starting from HK$6.4 million for a two-bedroom flat measuring 471 sq ft, going up to HK$17.7 million for a four-bedroom unit of 1,077 sq ft. Still, the project’s first batch was mostly sold out, with 28 buyers submitting bids for every available unit.

A general view of CK Asset’s Sea to sky project at Lohas Park in Tseung Kwan O on 27 June 2020. Photo: Martin Chan

Four months on, and with several more developers jumping back into the market with newly completed flats for sale, buyers have more to choose from, driving some to pause to consider.

With buyers remaining on the sidelines, the Hong Kong government may resort to reclaiming more land to build affordable housing, a way to address the chronic housing problem in the former British colony.

The city’s real-estate federation has proposed to reclaim three islands around Guishan that will accommodate around 800,000 residents, adding to the HK$624 billion Lantau Tomorrow project that was approved last year. Lam is due to address the public in her annual policy speech on Wednesday.

Hong Kong is set to miss the annual target of land supply for a third consecutive year in 2020 because of the lack of land plots available to be developed, according to analysts. The government plans to supply 12,900 new private homes for the year through March 31 next year and 7,400 have been added so far.

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