Sellers of public housing asking 'jackpot' prices and driving off buyers

Expected new demand for HOS flats sees owners of public-housing flats push up asking prices by 30 to 50 per cent in the space of two months

PUBLISHED : Wednesday, 12 June, 2013, 12:00am
UPDATED : Wednesday, 12 June, 2013, 4:07am

Sellers of public housing flats are trying their luck with "jackpot" prices and turning buyers away from the market, agents say.

"Asking prices of public housing flats have surged by 30 to 50 per cent in the last two months," Fullmark Property Agency sales manager Kim Chan Shek-kam said. "Sellers are setting prices as if they want to try their luck by winning the Mark Six jackpot, despite the fact they can hardly find any buyers at those prices."

The surge in prices saw a public housing flat on the Heng On Estate in Ma On Shan, New Territories, sell for a record-breaking price of nearly HK$3.29 million last month. Chan said flat owners at the Fung Tak public housing estate in Diamond Hill had been asking for between HK$1.2 million and HK$1.3 million for their 500 square foot flats about a month ago, but were now asking HK$1.8 million to HK$2 million. Prices for public housing flats at Lower Wong Tai Sin Estate had jumped from below HK$1.6 million two months ago to at least HK$2 million now.

Data from Centaline Property Agency shows 45 public housing flats were sold in the secondary market for a total of almost HK$77.6 million in May. The number of sales was up 44 per cent, and prices up 41 per cent, month on month.

Fourteen of the flats were sold for more than HK$2 million, including the one in Heng Fung House on the Heng On Estate.

Of the 10 highest prices ever paid for public housing flats, six were in the first five months of this year, Centaline data shows.

Chan said demand for, and prices of, public flats had risen significantly because the prices of government-subsidised Home Ownership Scheme flats - seen as a better alternative - had climbed to at least HK$2.5 million in recent weeks. The surge in prices of HOS flats is due to expectation of strong new demand from "white form" applicants this month under a government scheme that allows 5,000 households on low incomes who live in private flats to buy second-hand HOS flats without paying a land premium.

Agents said a three-bedroom flat on the Tung Tau Estate, a public housing estate in Wong Tai Sin, was sold to a "white-form" applicant for HK$2.15 million, a record for the estate.

Centaline's senior associate director of research, Wong Leung-sing, said some public housing flats were also sold at record-breaking prices because of their convenient location.

He expects the volume of sales of public housing flats to remain high but does not see prices rising further, as people may not be willing to pay over the odds for public housing.

Sunny Lee, an agent who focuses on the subsidised property market, said most "white-form" applicants wanted to buy HOS flats and were not interested in buying second-hand public housing.

"Many live in public housing with their parents already and they want to have a better living environment. Also, they believe HOS flats have a higher upside potential," he said.

Another barrier to buying public flats may be finding funds, Lee said. "If people are interested in buying public housing, they should first make sure a bank will be prepared to offer a loan."