Nan Fung cuts price of new flats as Hong Kong’s property market sours further
A second developer has lowered the asking price of brand new flats in Hong Kong as a toxic combination of rising interest rates, a struggling stock market and the fallout from the US-China trade war dampen demand in the world’s most expensive property market.
Nan Fung Development has priced the latest batch of 242 units at its LP6 development in Lohas Park, Tseung Kwan O, at an average of HK$16,006 per square foot after factoring in a discount of 19.5 per cent.
That is 1.7 per cent lower than the launch price a week ago, Nan Fung said on Friday.
The price incentive comes even though Nan Fung has managed to sell 1,422 units at LP6 for more than HK$10 billion since early last month. The whole project has 2,392 units.
“It is unusual but it is probably because the market sentiment continues to deteriorate. It would not be a surprise to see home prices fall by as much as 10 per cent within one or two months,” said Raymond Cheng, head of Hong Kong and China research and property at CGS-CIMB Securities.
“The market is obviously entering into a buyer’s market and developers dare not price their new flats at high prices. If the sales response is poor, it will have a devastating impact on market sentiment.”
Nan Fung’s price cut comes as Hong Kong’s stocks suffered their biggest weekly loss in eight months, sliding for a fourth day on Friday.
The Hang Seng Index fell by as much as 1 per cent, or 250.41 points, to touch 26,373.46 on Friday morning, before recovering some losses and closing at 26,572.57, down 0.19 per cent.
The losses added up to 4.38 per cent or 1,215.95 points for the week, the most since the week ending February 9, when the market lost 9.49 per cent.
On Tuesday, Lai Sun Development reduced the prices of 12 units at its joint venture project, Monti, in Sai Wan Ho, by HK$972,000, a 10 per cent discount.
Only five flats had sold when the 144-unit project was launched in early September.
“In a boom market, developers will certainly increase prices in every subsequent round of sales,” said Vincent Chan Kwan-hing, managing director at property agent Qfang.
“But they will offer their projects at more competitive prices in a softening market,” he said.
The price cuts are also likely to be partly due to the ample supply of new flats that will become available for pre-sale in the next few months.
Eleven residential projects with 6,979 units have received pre-sale consent, according to Lands Department data released on Friday.
The number of completed units is expected to increase to 8,935 in 2021 from 1,760 in 2019.