Hong Kong’s appetite for new homes is almost sated as weekend sale washes out amid looming property supply

In Tuen Mun, Sun Hung Kai Properties sold 83 per cent of the 223 flats in Phase 2A of its Novo Land project, a setback compared with last week
Over at Ho Man Tin, Chinachem Group found just one buyer for the 66 larger apartments on sale at In One Above

Weekend Property

Lam Ka-sing

Published: 8:21pm, 17 Jun 2023

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Hong Kong’s appetite for new homes is almost sated, as a weekend property launch left dozens of flats unsold while a leftover project barely received a look-in.

In Tuen Mun, Sun Hung Kai Properties (SHKP) sold 186 units, or 83 per cent of the 223 flats in Phase 2A of its Novo Land project, a setback compared with a week ago when all 188 flats on offer found buyers, according to sales agents.

Over at Ho Man Tin, Chinachem Group found just one buyer for the 66 larger apartments on sale at In One Above. The project’s average price ranges from HK$21,948 to HK$31,137 (US$3,981) per square foot after discounts.

“The market is not good [and] has gone quiet for a long time,” said Centaline Property Agency’s Asia-Pacific vice-chairman Louis Chan, adding that “the customer source has been exhausted” for the current phase of SHKP’s project in Tuen Mun.

Sun Hung Kai Properties’ Novo Land development in Tuen Mun on 13 July 2022. Photo: Xiaomei Chen

The two projects, with 289 units between them, were the first weekend sales since the US Federal Reserve and the Hong Kong Monetary Authority (HKMA) called a recess this week on their interest rate hikes after 10 consecutive rounds of increases since March 2022.

Hong Kong’s commercial banks responded by keeping their prime rates unchanged, but the pause failed to unleash the city’s buying power. Fed chairman Jerome Powell and HKMA chief executive Eddie Yue Wai-man warned this week that the cycle of rising interest rates was far from over.

Property buyers queued for Chinachem Group’s In One Above project in Ho Man Tin at the developer’s sales office in Tsuen Wan West on 21 May 2023. Photo: Xiaomei Chen

“New home sales are expected to fall” this month due to the “strong wait-and-see sentiment in the market,” said Midland Realty’s residential division chief executive for Hong Kong and Macau Sammy Po.

The market now expects a new project in Hung Shui Kiu to be unable to launch “within the month,” which further reduces the property market’s turnover, he said, adding that second-hand home prices may fall by 1 to 2 per cent.

The average price of Phase 2A at Novo Land has risen 4 per cent from the previous round to HK$14,145 per sq ft. The project, with a total of approximately 4,600 homes, is the largest residential project in Tuen Mun.

People held umbrellas against the heavy rain in Tsim Sha Tsui on 17 June 2023. Photo: Yik Yeung-man

Buyers who did show up defied a rainstorm warning to snap up the flats on offer. The average property price in Tuen Mun, located near Hong Kong’s Northern Metropolis close to the city’s border with mainland China, is cheaper than areas closer to the urban centre.

New projects in the Northern Metropolis may make up about 22 per cent of Hong Kong’s total home supply over the next five years, according to an estimate by Bloomberg Intelligence. That may provide a more affordable option for homebuyers, driving demand away from other districts.

Developers are also under pressure to cut their prices to boost sales, as potential buyers have turned more cautious due to the uptick in Hong Kong mortgage rates, the report said.

Hong Kong’s home prices could stage yet another retreat from 2023 until 2025, as an expected supply surge of about 20,200 private homes every year may force developers to make concessions, according to data from Our Hong Kong Foundation cited by Bloomberg’s analysts. The peak of about 20,900 units is expected in 2025.