Demand for Hong Kong flats appears to defy cooling measures

Hong Kong’s residential property sector appears to be defying the government’s best efforts to cool the market, as home prices continue to hit new highs.

China Overseas Land & Investment said a 1,606 square-foot unit at Kai Tak, site of the city’s former airport, sold for HK$48.19 million, or HK$30,011 per square foot, through tender on Monday.

“It is a record price in our project and it reflects strong demand for such unit size,” said Tony Yau,

a director and general manager at China Overseas Property, a subsidiary of China Overseas Holdings.

The unit is at the One Kai Tak development, the city’s only project restricted to permanent residents.

Meanwhile, Wheelock Properties said it achieved sales revenues of HK$21 billion last year, its highest ever.

Wheelock announced its results about two hours after Hong Kong Monetary Authority chief executive Norman Chan said home sales in the primary residential market had dropped 80 per cent in December. A month earlier, the government introduced a 15 per cent stamp duty for buyers of second homes as part of efforts to rein in demand.

Home sales in the secondary market fell 30 to 40 per cent in the same period, said Chan in a financial affairs meeting at the Legislative Council today.

Demand for new flats is particularly high as developers offer a range of incentives such as stamp duty subsidies and attractive mortgage schemes. Many will provide a first mortgage of up to 80 or 90 per cent of an apartment’s value, far higher than the amount offered by banks.

Buoyed by strong demand, some developers are accelerating their marketing for new projects.

Four property developers in Hong Kong are set to roll out more than 2,000 flats soon.

K-Wah International, Cheung Kong Property Holdings and Henderson Land Development have uploaded their sales brochures for three new projects to their websites in recent days, a move that indicates the official pre-sales dates are nearing.

Meanwhile, Wheelock Properties chairman Stewart Leung said the firm would release three projects this year, and possibly a fourth.

He declined to make a forecast for sales this year, but said: “Every year we aim to sell more than HK$10 billion.”

Leung called for the government to remove some of the cooling measures to revive the secondary residential market.

“The government should review the four-year long cooling measures as they have failed to stop prices from rising, but are killing sales in the secondary market,” he said.

He suggested the government consider relaxing mortgage lending restrictions in order to encourage buying in the secondary market.

Leung said home prices are unlikely to fall as construction costs continue to soar.

He said the government should consider importing labourers to work on government projects to ease the labour shortage problem.

“As imported labour would mainly focus on public works, the private sector would not need to compete with the government for construction workers. It would ease the labour cost,” he said.

He forecast that home prices would rise 5 per cent this year.