Tsuen Wan West land sale prompts homeowners to raise prices

PUBLISHED : Wednesday, 15 August, 2012, 12:00am
UPDATED : Wednesday, 15 August, 2012, 5:34am

The high price developer Cheung Kong paid for a site at the Tsuen Wan West MTR station buoyed market confidence, with owners of homes in the area rethinking their decision to sell up or asking for higher prices.

"Stimulated by the good news of the auction, property owners in the Tsuen Wan district have begun marking up the asking prices of their flats by 2 to 3 per cent on average in the last few days," said Richard Lee Chi-sing, chief executive of real estate agency Hong Kong Property Services (Agency).

In one case a homeowner used the news as a reason to raise the price of his HK$6 million flat by 10 per cent, said Lee - a move that indicated he was in no hurry to sell his flat but wanted to wait for a higher price.

On Friday, Cheung Kong announced it had won the bidding for the site, where flats will have a sea view, for HK$9.63 billion, at least HK$1.14 billion higher than market estimates.

Lee said some buyers were also willing to pay about three per cent more to match sellers' higher prices, and deals were now being sealed faster than in June, when the market was quiet before the new chief executive came into office.

"The land sale result came along with other positive factors such as an improving stock market and the government's promise not to crush the property market, which together have boosted market confidence."

According to data from agency Midland Realty, there were 60 sales during the weekend in 15 major private housing estates it monitors, up about a fifth from the previous weekend, and a five-week high.

"Market sentiment continues to improve after the sale of the Tsuen Wan site at a price above what the market expected, which was in contrast to the result of the previous attempt to tender the site earlier this year," said Vincent Chan Kwan-hing, executive director and chief executive of the residential department at estate agency Midland Holdings.

Ken Hung Ka-kin, a senior sales manager at Midland's Tsuen Wan branch, said the housing market had become more vibrant.

For instance, owners at Chelsea Court raised prices by 3 to 7 per cent and a buyer upped his offer on a 652 sq ft flat in the estate to HK$4.6 million - a record for a two-bedroom flat there - because he was upbeat about the market after the land sale.

Ricacorp Properties director David Chan said the favourable land sale prompted some owners to put off selling their flats or ask for higher prices, though buyers might find the increases too much, he cautioned. With a limited supply of flats on the secondary market, transactions might shrink by 5 per cent this week.

"The land sale shows that developers have recovered their confidence in the market," Chan said. "But this will not have much impact on developers' plans for flat sales and prices of new projects, as they have their own schedule, which will not be easily affected."