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Exterior view of Henderson Land Development's Cetus Square Mile, on 18 Ka Shin Street in Mong Kok on 15 June, 2018. Photo: SCMP / Felix Wong

Hong Kong’s home sales flop for a second consecutive weekend as worsening US-China relations give buyers more cause for pause

  • Two flats were sold out of 104 on offer in three districts across Hong Kong, marking the worst sales weekend since the city climbed out of a five-month slump in January
  • Wang On Properties managed to sell two flats out of 86 units in Yau Tong. No transactions were reported at Cetus Square Mile in Mong Kok or one Artlane in Sai Ying Pun
Hong Kong’s home sales flopped for the second consecutive weekend, as an unexpected deterioration in US-China relations gave investors reason to postpone making long-term financial commitments.

Two flats were sold out of 104 units on offer in three districts across the city, marking the worst sales weekend for developers since the city emerged from its five-month price correction in January.

Wang On Properties managed to sell two of the 86 flats at its Maya by Nouvelle project in Yau Tong as of 5:40pm, sales agents said, a far cry from the March 23 frenzy when the developer sold 73 per cent of 99 available units. Three buyers who committed earlier reneged on their contracts, and had to forego their deposits.

Not a single transaction was recorded for the 12 flats at Henderson Land Development’s Cetus Square Mile in Mong Kok, or for the six units of One Artlane in Sai Ying Pun, agents said.

“Developers and buyers alike are carefully reassessing the outlook of the property market, as the trade war stretches to the technology sector, raising concerns about a long-lasting tension between the US and China,” said Ricacorp Properties’ research head Derek Chan. “Weak sentiment is expected to dominate the market for a while since the trade war is unlikely to end any time soon.”

Hong Kong’s developers have slowed their sales launches amid concerns of a new battlefront in technology between the world’s two largest economies, which would hurt the city’s business prospects, spilling over to shrinking corporate profits, a weak stock market, and job losses.

The number of real estate transactions slowed to 222 in the week that ended on May 23, a drastic slowdown compared with the 2,000 units sold in the first 16 days of the month, according to the Hong Kong Economic Times.

“A wait-and-see attitude has started to dominate,” said Sammy Po Siu-ming, the chief executive of Midland Realty's residential department. “If the trade war cannot be resolved, transaction volume will shrink. The growth in home price will also moderate. We have adjusted the expected home price growth in May from 3 per cent to 1 per cent.”

The watershed moment between the bullishness of early May and the current slump happened on May 10, when US tariffs on US$200 billion of Chinese exports more than doubled to 25 per cent, effective June 1. In retaliation, China’s government raised the duties three days later on US$60 billion of US imports to 25 per cent, effective June 1.
Last week, US President Donald Trump barred the use of telecommunications equipment made by companies deemed a threat to America's national security, aimed at products made by Huawei Technologies, the world's largest maker of 5G telecoms equipment. After Trump’s order, Google last week suspended its hardware, software and technical business with Huawei, except those publicly available via open-source licensing.
Exterior view of Henderson Land Development's Cetus, Square Mile, on 18 Ka Shin Street in Mong Kok on 15 June 2018. Photo: SCMP / Felix Wong
Until the unexpected escalation of the trade war, Hong Kong was in the throes of a property bull run, with home prices jumping by about 11 per cent this year, prompting UBS to forecast a rally that could last another 10 years. The average price of pre-owned flats in 50 major housing estates rose to a record HK$15,352 per square foot (US$1,955) last month, after leaping 2.4 per cent, the largest monthly increase ever, according to Ricacorp Properties.

The weekend’s sales flop was a reminder to Hong Kong’s property industry that the spillover effects of trade, macroeconomic and political tensions could dent buying interest.

Underscoring the stakes, economic impact and uncertainties from the US-China trade war have not been factored into Hong Kong’s growth forecast, which the government pegged at 3 per cent this year, said Financial Secretary Paul Chan Mo-po.

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