Investors rush to buy in first-weekend property sales despite biggest base rate rise in 22 years

Kerry Properties sold 57 of its 60 one-bedroom units on offer at the residential project at 10 LaSalle development in Ho Man Tin by Saturday afternoon

The Hong Kong Monetary Authority followed the US Fed with a base rate rise, but mortgage rates remain at about 2 per cent

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A view of the 10 LaSalle development from Kerry Properties on May 13. The project saw brisk frist-weekend sales of new units after the biggest base rate rise from the Hong Kong Monetary Authority in 22 years. Photo: SCMP / Edmond So

Published: 6:30pm, 14 May 2022Updated: 7:00pm, 14 May 2022

Investors rushed to get ahead of the rising interest rate cycle by snapping up new flats in a first-weekend property sale after the biggest interest rate rise in 22 years by the Hong Kong Monetary Authority (HKMA) earlier this month.

By 6pm on Saturday, 66 units of the 88 units made available across two separate projects had been bought, according to property agents. The strong demand suggests higher interest rates have not hurt property market sentiment.

Kerry Properties sold 57 of its 60 one-bedroom units on offer at the residential project at 10 LaSalle development in Ho Man Tin. Property agents expect it can sell out most or all by the end of the day.

Offer prices for the units, which are between 319 to 409 sq ft, range from HK$7.38 million (US$940,000) to HK$10.99 million. The average price stood at HK$24,258 per square foot after discounts offered by the developers.

“The increase of the US Fed rate and HKMA base rate is well expected and they are not a surprise to the market. The homebuyers have well prepared to pay more for their mortgage loans in coming years,” said Louis Chan, vice-chairman and chief executive of Centaline Property Agency’s residential department in Asia-Pacific.

“The strong response to the weekend sales is due to the fact that were almost no new flat sales in the first quarter, while the homebuyers return to the market when developers launch a new project,” Chan added. He also noted that investors may believe the political situation has become more stable with the election last Sunday of John Lee as the city’s next chief executive.

Hong Kong’s cost of money soared by the most in 22 years as the city’s de facto central bank followed the US Federal Reserve to increase the base lending rate by 50 basis points to 1.25 per cent. That marked the biggest one-time increase in Fed rates since 2000.

Hong Kong’s base rate is expected to rise to 4 per cent by the end of 2023.