Hong Kong home buyers shrug off supply, rate concerns and flock to Tsuen Wan project

Hong Kong home buyers appeared to be undeterred by rising flat supply and imminent interest rate increases as they quickly snapped up 400 flats at a project launch in Tsuen Wan on Friday. One unit sold at more than HK$20,000 per square foot – a record in the area.

Hundreds of buyers, accompanied by real estate agents, began queuing at the sales office of Pavilia Bay at 9am for the first batch of 400 flats to be offered.

The project is jointly developed by Vanke Property (Overseas) and New World Development.

New World said all the 400 flats were sold and 199 more units would be offered on January 24. It said one buyer paid HK$27.16 million, or HK$20,219 a square foot, for a 1,366 sq ft four-bedroom unit.

“The primary market is getting hot. With the tighter mortgage policy, buyers have no choice but flock to buy new flats,” said Sammy Po Siu-ming, the chief executive of Midland Realty’s residential department.

Of the four-bedroom flats on sale, he said only one unit cost more than HK$20,000 a square foot.

More than 7,000 people had registered to buy the 400 flats, the strongest initial response for a project launch in the past three months.

The number of units was also the largest for the first-day launch of a new project since the government raised the stamp duty for residential transactions to 15 per cent in November last year. The higher duty does not apply to buyers who do not own a property.

Louis Chan Wing-kit, the Asia-Pacific chief executive of Centaline Property Agency’s residential department, said buyers had regained confidence in the market after Chief Executive Leung Chun-ying’s policy address on Wednesday did not include more property controls.

“No further intervention means positive news to the market,” Chan said. “We have 10 customers who each wanted to buy more than two units. Two of them even planned to buy four units for a budget of HK$30 million.”

The strong response to the Tsuen Wan project came just a day after the Development Bureau announced 25 sites capable of providing more than 60,000 flats for development between 2019 and 2024.

Speaking at a press conference following the policy address, Secretary for Transport and Housing Anthony Cheung Bing-leung said the use of taxation measures in managing housing demand in the past few years had been effective.

“There was a downward trend in terms of housing prices and rent from the second half of 2015 until the second quarter of 2016, when it rose again,” he said.

Cheung said there were external economic environment factors, such as low interest rates, which affected housing prices.

He said the government would continue to monitor the situation and whether they would withdraw control measures depended on the market situation and external economic environment.

The price for a batch of 197 units at Pavilia Bay averaged HK$15,183 per square foot after factoring in a discount of up to 22 per cent, while the price for a second batch of 203 flats was HK$15,066 per square foot.

The flats, with sizes ranging from 318 sq ft for a studio unit to 1,366 sq ft for a four-bedroom unit, were offered at HK$4.41 million to HK$27.62 million, or HK$13,043 to HK$20,219 per square foot, after discount.

Additional reporting by Peace Chiu