New launches prevent Hong Kong’s housing estates from breaking price records as property supply glut lingers

Close to 80 housing estates across Hong Kong are still priced below their peaks, even though the city’s overall lived-in home prices recently soared to a new record.

Some of the developments have seen units changing hands for less than three quarters of their previous peaks reached two or three years ago.

Of the 133 major housing estates tracked by Centaline Property Agency, 77 are yet to scale new heights in terms of average price this year. Residence Bel-Air in the Southern district was the biggest lagger, and Allway Gardens in Tsuen Wan was the cheapest development, according to Centaline’s data.

The housing estates that are falling behind will find it difficult to reach their previous records as there are fewer investors in the market now, and newer developments that are more attractive to buyers, said Wong Leung-sing, senior associate director of research at Centaline.

Prices at Residence Bel-Air, a favourite for mainland Chinese buyers, surged to HK$44,501 (US$5,711.41) per square foot in 2018 when investors were more willing to pay high prices to bet on future increases in value. The average price had slumped by 27 per cent to HK$32,424 per square foot in the second week of August this year.

“There were investors and mainland buyers back then, but there are hardly any now. Now it depends on local users, which means it will be much slower [in breaking records],” said Wong. “Genuine buyers are dominating the market. They are unlikely to bid up prices.”

The South Land development on top of Wong Chuk Hang underground station is one such new launch that had lured investors away from old housing estates.

When it was launched in May it attracted buyers like Wang Sing, the former chief executive of Hong Kong-listed technology and media company Tom Group, and members of numerous prominent families in Hong Kong.

Allway Gardens in Tsuen Wan, which was built around 1980, is the estate with the lowest average price on Centaline’s list, at HK$10,712 per square foot, still 11.2 per cent short of its peak of HK$12,066 in June 2019.

Heng Fa Chuen in the Eastern district, a well-known estate built in the 1980s, had an average price of HK$17,663 per square foot, 6.7 per cent below a record of HK$18,934 per square foot two years ago.

“The [new] projects in Tsuen Wan were hot, diverting purchasing power. [Allway Gardens] was not as popular as it used to be, with new projects completed nearby,” Wong said. “The same goes for Heng Fa Chuen. Eastern district also saw a lot of new projects completed.”

La Cite Noble in Tseung Kwan O is among the housing estates that have set new records. Its average price went from strength to strength in June and August, reaching HK$18,463 per sq ft.

“The prices are cheap at around HK$7 million, and eligible to mortgages of 90 per cent” of the loan-to-value ratio, said Ken Lau, area director at Hong Kong Property Services (Agency).

Growth in Hong Kong’s home prices is showing signs of easing as buyers become reluctant to bid up prices and sellers raise their asking prices.

The gauge of lived-in homes compiled by Centaline, the Centa-City Leading Index (CCL), slipped 0.5 per cent to 190.39 in the second week of August after a three-week rally carried it to a record in the previous week.

Wong expected the index to see-saw as buyers hold back and transaction volume falls.

“The chances of prices dropping are slim,” he said.

Homeowners are becoming aggressive and raising their asking prices, which encourages buyers to adopt a wait-and-see approach, according to Willy Liu, chief executive of Ricacorp Properties. They may take several weeks to adapt to the increase in asking prices, he said.