Hong Kong, Chinese developers hope to piggyback on robust secondary property market sales, to release more than 1,000 units

Hong Kong and mainland Chinese property developers are hoping to piggyback on strong activity in the city’s secondary market and will release more than 1,000 units in the coming weeks.

The sales of lived-in homes jumped more than threefold on the first weekend after Hong Kong leader Carrie Lam Cheng Yuet-ngor announced a relaxation in mortgage rules on October 16. According to the changes, homebuyers can avail loans equalling 90 per cent of the value of flats worth up to HK$8 million (US$1.02 million), up from 60 per cent previously, as well as loans equalling 80 per cent of the value of flats worth up to HK$10 million, from 50 per cent previously.

The easing in mortgage lending applies only to completed residential flats, but developers are hoping to capitalise on positive sentiment in the market as they seek to shore up sales.

“If I was a developer, I too would squeeze in to sell in a more robust market,” said Keith Chang, senior director of realty investment at Savills. He added that the soon-to-be implemented vacancy tax would also contribute to a rash of property launches.

“Home seekers will quicken their buying decision in an upbeat [market],” said Joseph Tsang, chairman of JLL Hong Kong. He said developers also needed to catch up with their year-end sales targets.

“Spending has been severely hurt by more than four months of social unrest. Builders have to sell fast, as they will benefit from pent-up demand,” he said.

CK Asset Holdings, China Evergrande Group, Sun Hung Kai Properties, Billion Development and Project Management, China Overseas Land & Investment, Grand Ming Group Holdings and HKR International have all sped up launches to take advantage of an improved market sentiment.

CK Asset will release another round of 176 units at its Seaside Sonata development in Cheung Sha Wan on Friday, October 25, while Billion Development will offer 99 units at The Aurora in Tsuen Wan the following Saturday. China Evergrande’s 325 units at Emerald Bay in Tuen Mun – its first residential project in Hong Kong – will be released the following Monday and Tuesday.

Sales of lived-in homes jump after government raises mortgage entitlements

Sun Hung Kai Properties will release 72 units at Park Yoho Napoli, its completed development in Kam Tin, on Tuesday. HKR International said it would release 24 units at its Poggibonsi development in Discovery Bay for sale on Wednesday.

Another two projects are also lined up for sales next week. China Overseas Land & Investment has released the price list for 189 units at The Regent development in Tai Po. It has priced the development at an average price of HK$14,440 per square foot.

Grand Ming also said it might release The Grand Marine project, in Tsing Yi, as early as next week. It has announced the price list of the first 156 units, at an average of HK$14,813 per square foot, about 4 per cent lower than the HK$15,419 per square foot asking price of Evergrande’s Emerald Bay.

Housing policy cushions Hong Kong’s property slump

Savill’s Chang said an easing of financing rules as well as the introduction of the vacancy tax had effectively increased the supply of flats in Hong Kong. The government was on the right track as far as easing the housing shortage was concerned, he said.

JLL’s Tsang said the relaxation in mortgage rules was, however, unlikely to lift home prices, as more home seekers will be lured to the secondary market.

Chang echoed this view, and said the relaxation might “fuel short-term demand for secondary premises in those particular price brackets. While the mass market is benefiting from supportive government measures, which may boost prices over the next three to six months, if worsening economic fundamentals feed through to rising unemployment and lower wages, demand may dwindle again next year”.