Editorial | Gloomy flats market also provides buying opportunity for some
- Shock land-sale decision by Hong Kong authorities comes amid homes glut and falling prices, but it is not all bad news
The government may deny it, but it is hard to avoid the conclusion that its smaller offering of land for sale in the second quarter of the current financial year reflects the gloomy mood in the property market. In a surprise announcement, the government said it would sell only two residential plots. The parcels in Kennedy Town and Tsuen Wan will produce a total of 1,739 flats and will be open for tender between now and September.
There is a glut in the market, and flat prices are sagging. Second-hand home prices fell for the first time since December. On an annual basis, the widely watched index has slumped 8.9 per cent.
With an overhang of 28,000 new homes in the pipeline – equivalent to twice the size of Taikoo Shing – for this year alone, the government must feel an urge to tamper with the supply of flats. There is a projected annual average of about 20,200 new private residential units at least until 2025. The near-term market outlook is understandably gloomy as interest rate rises – and the cost of financing a mortgage – are expected to continue despite a temporary pause from the US Federal Reserve and the Hong Kong Monetary Authority.
A flood of mainland buyers into the city after Covid restrictions were lifted failed to materialise. Coupled with rising construction costs, conditions are ripe for prices to keep dropping. Property developers are worried, and have been lobbying the government to remove some of the so-called spicy market-cooling measures.
A few developers now offer big discounts by cutting prices to 2018 levels. Henderson Land reportedly offered discounts of up to 15 per cent below market price at Henley Park in Kai Tak.
Other developers and real estate agencies provide mortgage discounts, and even dining and travel vouchers, as sweeteners.
Financial Secretary Paul Chan Mo-po recently said the government had been working with the Hong Kong Monetary Authority on future policies, but a fine balance is needed between the interests of first-time homebuyers and property market stability.
