Buyers shrug aside rising mortgages as thousands throng sales offices to snap up homes

Thousands of homebuyers shrugged off rising mortgage rates and joined long queues at the offices of some of Hong Kong’s biggest developers hoping to snap up newly released flats.

As many as 4,800 buyers registered to bid for 307 flats at K & K Property’s Victoria Skye project, which is located at the former airport site of Kai Tak. One buyer, who wasn’t identified, walked away with four flats for a total of HK$30 million (US$3.85 million), agents said.

“Sales had been impressive,” said Midland Realty’s chief residential executive Sammy Po.

“The most recent tightening bodes well for developers as they can use their own mortgage schemes with preferential rates to entice buyers.”

Hong Kong’s monetary authority tightened mortgage lending rules two weeks ago, implementing measures aimed at stopping the city’s runaway real estate prices, which surpassed the industry’s last recorded peak in 2015.

Under the tighter rules, loans for properties valued at less than HK$10 million are limited to 50 per cent of the total price for borrowers with outstanding mortgages, and 40 per cent for those exceeding HK$10 million.

Following the move, four of Hong Kong’s biggest banks raised their mortgage rates by 10 basis points to 1.4 percentage points above the city’s interbank offered rate, or Hibor.

The increases will take effect Monday at HSBC and Standard Chartered, and on June 5 at Bank of China (Hong Kong) and Hang Seng Bank.

With the higher rate, buyers would need to pay an extra HK$3,000 per annum for a 30-year Hibor-linked mortgage of HK$4.2 million, according to calculations by mReferral Mortgage Brokerage Services’ chief economic analyst Sharmaine Lau Yuen-yuen.

However, that did little to dampen buyers’ enthusiasm this week.

On Friday, thousands of people descended on Cheung Kong Property offices to bid on 496 flats at its Ocean Pride project in Tsuen Wan. Spurred on by the strong response, the developer released another 346 flats for sale.

K & K’s Victoria Skye, with flat sizes ranging between 355 and 850 sq ft, was priced at an average of HK$17,888 per sq ft, making the most expensive flat HK$20 million and the cheapest HK$5.45 million after discounts.

Up to 70 per cent of buyers are purchasing flats for their own use, Midland’s Po said.

“The second-hand market will suffer because many people now may not be able to afford the down payment in the wake of the new rules,” Po said.