NewNew homes sales in Hong Kong to top 20,000 on developers' discounted price strategy
Developer discounts drive sales though analysts say upward trend not sustainable with US rates to rise and oversupply in secondary market
New home sales in Hong Kong are set to top 20,000 units this year in their best showing in more than a decade, with the brisk demand seen driving a 10 per cent increase in prices.
Buggle Lau Ka-fai, chief economist at Midland Realty, said developers have pulled in HK$73.8 billion from the sale of 7,440 new units as of June 12. He expects transactions in the primary market to reach 20,000 this year, the highest in 11 years.
"Prices will rise 10 per cent this year," he said.
Others, however, doubt whether the growth is sustainable as developers are slashing listed prices of flats in key developments across the city in a bid to win the hearts and wallets of Hong Kong home buyers.
Some expect a reversal in price trends after entering the 12th year of gains, but others feel the market is still heading higher despite increasing supply and an impending interest rate rise in the US which would impact the local market given the peg between the Hong Kong dollar and the greenback.
Bocom International analyst Alfred Lau, who projects home prices could fall by 5 to 10 per cent during the second half of 2015, said developers have launched projects in Tsueng Kwan O, Yau Tong and Hung Hom at low prices to undercut nearby rival projects.