Hong Kong property sales post modest results in October debut as homebuyers await new policies, expect further rate increase
- Henderson Land Development’s One Innovale-Bellevue in Fanling sold 45 flats on Sunday, around one-third of the 143 units on offer
- The outlook for property sales in the fourth quarter is not optimistic because of a possible further increase in interest rates
“[Sunday’s] result is not bad for a second round of sale,” Po said. “The project mainly caters to young people who are first-time buyers and can only afford small-sized new flats.”
The entry price at One Innovale-Bellevue, which is designed to have a total of 1,600 flats, is HK$3.07 million for a unit that measures 221 square feet.
“Local homebuyers are taking a wait-and-see approach, as they want to know what new property policies will be announced by the Hong Kong government in the coming policy address, as well as the latest developments from mainland China’s 20th Congress later this month,” Midland Realty’s Po said.
The results come after a weak third quarter amid rising interest rates, according to Wong Leung-sing, senior associate director of research at Centaline.
“The outlook for fourth-quarter property transactions is not optimistic because it is widely expected that the US and Hong Kong will continue to increase interest rates,” Wong said. “The best-case scenario would be that fourth-quarter home prices and transactions maintain the level reached in the third quarter.”
The number of lived-in home transactions in the third quarter could reach about 6,800 deals valued at HK$57 billion, which would be the lowest number since 5,159 transactions worth HK$44.52 billion were recorded in the fourth quarter of 2018, according to Centaline. That number of deals would represent a 37 per cent decrease from the second quarter, when the value dropped by 41 per cent.
First-hand property sales, meanwhile, reached about 4,150 transactions, up 33 per cent than the second quarter and the highest since the 4,635 deals recorded in the fourth quarter last year. Their value, however, declined by 5.5 per cent to HK$36 billion, which reflected how most new flats sold in the previous quarter were small units.
Centaline’s Wong said that resulted from the decision by major developers to aggressively market new projects for sale.
Hong Kong’s 10 major banks last month increased their prime rates by 12.5 basis points to 5.125 per cent or 5.375 per cent. That means payment on a typical HK$5 million, 28-year loan with a 2.75-percentage point discount to the prime rate will increase by 1.6 per cent, or HK$323, to HK$21,029 per month, according to mReferral, a local mortgage broker.
Hong Kong’s currency has been pegged with the US dollar since 1983, which means the city followed US interest rates. Although the US Federal Reserve has increased interest rates by 300 basis points this year, analysts expect it will further raise interest rates by another 125 basis points around the year’s end as part of efforts to tame high inflation.