Dismal sales by Miami Quay shows Hong Kong’s home market is in a ‘depression’, expert says
- Only about 30 per cent, or 41 of the 137 flats on sale at Miami Quay in Kai Tak have been sold
- Besides a resurgence in Covid-19 infections, Hong Kong’s homeowners and potential buyers are also bracing for higher mortgage rates
Hong Kong’s housing market is in a “depression” according to one leading property expert, who pointed to poor sales at a prime new development in the city centre amid a backdrop of falling home prices, an interest rate upcycle and a new wave of Covid-19 infections.
Only about 30 per cent, or 41 of the 137 flats on sale at Miami Quay in Kai Tak have been sold, according to agents. Wheelock Properties, Henderson Land Development, New World Development and Empire Group priced the first 137 units of their Miami Quay flats at HK$23,250 per square foot on average after discounts earlier this month. The entry price was HK$5.24 million for a flat that measured 250 sq ft.
“The market is panicking amid rising interest rates and the pandemic. So it’s been much quieter,” said Louis Chan, Asia-Pacific vice-chairman and chief executive of the residential division at Centaline Property Agency. “It is Hong Kong’s problem. The entire Hong Kong property market is in a depression.”
Chan cited a poor economic environment for his bleak outlook, which has pressured both the primary and secondary markets. Chan added that upcoming new launches would have to wait until the economy improves. “Whichever project launches [now] will fail,” said Chan.
Miami Quay caters mainly to middle-class buyers, who have been hit by the current economic downturn, said Chan. Currently, only projects with a lower price range of HK$3 million (US$382,220) to HK$5 million, similar to that of Home Ownership Scheme flats, will sell now, added Chan.
There is prevailing wait-and-see sentiment in the market, with heavy discounts required to facilitate transactions in the secondary market, said Sammy Po, CEO of Midland Realty’s residential division for Hong Kong and Macau.
“With the recent volatile stock market, sentiment is sour and [property] sales have been relatively low,” said Po, who also cited the interest rate upcycle and higher Covid-19 infection numbers in the city.
The first phase of Miami Quay, comprising 648 flats in three tower blocks, is scheduled for completion next August. Together, its two phases will comprise 1,219 flats. As the second housing project to go on sale at the site of Hong Kong’s former runway, Miami Quay initially fetched 2,048 registrations of intent, which means 15 buyers competed for each flat.
The poor sales at Miami Quay come around 10 days after Wang On Properties launched its Larchwood micro-flats in western Mong Kok, with some as small as 181 sq ft and priced as low as HK$3.83 million. The developer sold 33 of the 83 homes on offer that day.
The Centa-City Leading Index, a gauge of lived-in home prices compiled by Centaline Property Agency, fell 0.8 per cent to 171.83 for the week ended September 4 – the lowest level since February 2019. The index has fallen 5.1 per cent over eight weeks and this fall may steepen, according to Centaline.
Aside a resurgence in Covid-19 infections, Hong Kong’s homeowners and potential buyers are also bracing for higher mortgage rates after the US Federal Reserve’s rapid interest rate hikes this year to tame the fastest inflation in America in four decades.
The Hong Kong Monetary Authority, the de facto central bank, has increased its base rate in lockstep due to the Hong Kong dollar’s linked exchange rate system with the US dollar.