Sales of luxury Hong Kong homes plunge to three-year low, with ‘cashed-up’ buyers not in the mood for big-ticket purchases
- Overall sales of homes costing HK$20 million or more fell 34 per cent from January to November year on year
- Cashed-up purchasers have the financial ability, but they are just not in the mood to buy in the current market conditions, agent says
The sales of luxury homes in Hong Kong plunged to a three-year low in the first 11 months of 2019, with fewer local and mainland Chinese buyers willing to commit to big-ticket purchases since June, when the city’s anti-government protests started.
The overall sales of homes costing HK$20 million (US$2.56 million) and above, including new and old properties, fell 34 per cent to 2,752 deals from January to November year on year, according to Centaline Property Agency. The value of transactions dropped 30.6 per cent to HK$133.7 billion over the same period, the consultancy said.
“A client who was keen on buying a luxury home in Tai Tam visited the unit at 8am, 5pm and 8pm on different days. He decided to defer the purchase after the US passed the Hong Kong Human Rights and Democracy Act in November,” said Jacky Chan, an agent at Centaline’s Mid-Levels branch.
The city has been rocked by seven months of anti-government protests, he said, which had held back some buyers, who believed home prices would fall further. “These cashed-up purchasers have the financial ability, but they are just not in the mood to buy in the current market conditions,” Chan said.
Derek Chan, head of research at Ricacorp Properties, also attributed the tumble in luxury home sales to fewer mainland Chinese buyers, who are a major buying force. “The violent social movement has scared them over the past seven months,” he said.
Visitors from mainland China plummeted to 2.5 million arrivals in October, down 45.9 per cent from the previous month, according to the Hong Kong Tourism Board. Altogether, there were 3.31 million arrivals in October, a decline of 43.7 per cent from the same month in 2018, the board said.
Meanwhile, Beijing continues to maintain capital controls, as China’s economy feels the affects of the trade war with the United States, which too has dampened home buying interest from the mainland, Ricacorp’s Chan said.
Last week, Beijing and Washington reached a breakthrough in their trade negotiations, but investors remain cautious when it comes to buying pricey homes.
JLL last week said prices of luxury homes will decline by as much as 20 per cent next year.
To step up sales and avoid being hit by the imminent introduction of the vacancy tax, developers are offering long completion dates and discounts. Sun Hung Kai Properties, the biggest developer in Hong Kong by market value, is offering extra sweeteners to boost sales at its luxury residential development, St Barths in Ma On Shan, by allowing buyers up to five years to complete the purchase of the villas, which cost about HK$45 million each.
The government has proposed a tax of 5 per cent of a property’s value if a unit is left empty for six months after receiving its occupation permit, to stop developers from hoarding completed but unsold property, and to ease the city’s housing shortage.
“Developers will speed up the sale of luxury projects next year at attractive prices, amid rising competition for buyers,” said Centaline’s Chan.