Is Hong Kong’s property boom over? Homeowners and developers rush to cash in before further price falls

Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor’s policy speech on housing on October 10 has bruised sentiment in the sector, with some owners now being reported to have shaved a whopping 30 per cent off their asking prices as a result.

Commentators say the free fall in stock markets, rising borrowing costs and the worsening US-China trade war have also spooked homebuyers away from what remains the world’s most expensive property market.

And there was a markedly tepid response to two new housing releases in the past two weekends.

“This all indicates individual owners are worried that market sentiment will sour further,” said Derek Chan, head of research at Ricacorp Properties.

Last Monday, a 1,567 square feet flat at Celestial Heights in Ho Man Tin sold for HK$27.5 million (US$3.5 million), or HK$17,549 per sq ft, about 30 per cent below recent prices achieved in the area.

“The unit sold within 24 hours. The owner is probably in financial stress and wanted to sell,” said a spokesman for Midland Realty.

Another two adjoining flats, with a combined area of 1,189 sq ft, at Mantin Heights in Ho Man Tin are now being offered at HK$26 million, or HK$21,867 per sq ft. Midland said the asking price was 20 per cent lower than the original.

Hong Kong Chief Executive Lam’s ambitious plans for the city include extensive reclamation work that could provide 1,700 hectares (4,200 acres) of land off the east of Lantau Island, part of the wider HK$500 billion Lantau Tomorrow Vision blueprint, to turn the city’s largest outlying island into a residential and business hub. The area could house up to 1.1 million people in the next two to three decades.

“The government’s housing measures mainly focus on long-term solutions to ease Hong Kong’s housing shortage,” added Tommy Ng, associate district manager at Midland Realty’s Tin Shui Wai branch. “But a sharp fall in stock prices should have an immediate impact in dampening buying demand.”

Some units at Kingswood Villa, another project in Tin Shui Wai and one of Hong Kong’s top 10 sellers, have sold for below HK$10,000 per sq ft, he said.

“The number of units sold there dropped by more than half to 20 deals in September from 50 before the escalation of the US-China trade war, and the stock market volatility,” Ng said.

He said most homebuyers are now asking for a further 20 per cent cut on top of owners’ revised asking prices.

“It is extremely difficult to close a deal as price gaps between owners and buyers widen,” Ng added.

Meanwhile, sales at some projects have virtually ground to a halt, as some prospective buyers wait for price information at nearby sites to better gauge costs.

That is bad news for a number of projects set to be launched in the coming days, but potentially the opposite for buyers.

Chinachem Group is expected to cut the prices of its new project Sol City, atop the Long Ping subway station in Yuen Long on Tuesday, just one stop away from Tin Shui Wai.

“That could mean another severe blow to market sentiment,” Ng said.

Last Saturday, buyers bought just 100 units, or 20 per cent of the 491 flats on offer, at Nan Fung Development’s LP6 development at Lohas Park in Tseung Kwan O, even after significant price cuts from the previous batch.

At the One East Coast project in Kowloon’s Yau Tong, just 43 of the 130 flats on offer were sold on Friday, the first new project put on sale after the policy speech.

Meanwhile, a 670 sq ft unit at Tierra Verde, on top of Tsing Yi subway station sold for HK$10.5 million, or HK$15,672 per sq ft – or around 12.5 per cent below market value.