Hong Kong homebuyers show tepid demand for new units with prices expected to fall in the fourth quarter
- Out of 118 units available at One Innovale-Cabana in Fanling, 66 changed hands on Saturday, and none sold at Tuen Mun and Kowloon City communities
- Property sales are expected to recover slightly in the fourth quarter as housing prices drop by 1 to 2 per cent, says Midland Realty executive
Hong Kong new home sales turned out to be tepid on Saturday, as rising interest rates and weaker economic growth dampened consumer demand despite lower prices offered by developers.
Out of 118 offerings at One Innovale-Cabana in the Northern Metropolis, Fanling, 66 were sold on Saturday – just 56 per cent.
Meanwhile, not a single unit was sold at two other projects – Grand Jete in Tuen Mun on the western fringe of Hong Kong’s New Territories and Allegro in Kowloon City – on Saturday.
Rising interest rates and slower economic growth are weighing on buyers’ confidence, said Sammy Po, CEO of Midland Realty’s residential division for Hong Kong and Macau.
“Some buyers are trying to observe the interest rate hikes in the US in November and whether Hong Kong will follow [with its own increases],” he said. “The fluctuation of the stock market and the overall economic trend also make people wait on the sidelines.”
The city’s economy is also under pressure amid a worsening external trade environment, as the government downgraded its full-year economic growth to between 0.5 per cent growth and 0.5 per cent contraction from the previous 1 to 2 per cent expansion.
The units at Grand Jete and Allegro were leftovers after previous rounds of sales, which were less attractive compared with the new launches amid the current sluggish market, Po said.
The project was 11.3 times oversubscribed, receiving 1,387 bids as of Friday. The units ranged from studios to three-bedroom units, between 186 sq ft to 683 sq ft. After discounts of up to 7 per cent, they were priced at between HK$2.76 million and HK$9.42 million, with an average price of HK$13,428 to HK$15,400 per square foot.
The offerings of 80 units at Grand Jete, from CK Asset Holdings and Sun Hung Kai Properties (SHKP), comprised five units with gardens. The rest were studios and standard units with up to three bedrooms.
After a 17 per cent discount, the selling prices ranged from HK$3.93 million to HK$10.12 million, with average prices per square foot between HK$12,888 and HK$17,098.
Country Garden’s Allegro put 50 units on sale priced from HK$5.68 million to HK$10.97 million, or HK$22,678 to HK$22,080 per square foot.
Sales are likely to recover slightly in Hong Kong in the fourth quarter with an expected 1,000 transactions, Po predicted. Housing prices are expected to dip 1 to 2 per cent, compared with the 5 per cent drop from August to September, he said.