Price cuts in luxury homes expected to filter to the mass market

Developers set to launch 9,900 flats for sale this month and next; expect price cuts of 15-20pc

PUBLISHED : Wednesday, 06 November, 2013, 5:10am
UPDATED : Wednesday, 06 November, 2013, 6:17am

Recent cuts in the prices of new luxury homes are expected to filter through to releases in the mass market this month and next, according to property agents.

Sun Hung Kai Properties surprised the market when it released 181 flats for sale at The Cullinan at Kowloon Station last month at an average price of HK$29,097 per square foot of saleable area. Once rebates on stamp duties and discounts were factored in, the net effective price amounted to HK$25,024 per sq ft, which analysts said was some 21 per cent below prices in the secondary market of about HK$31,763 per sq ft.

New World Development and Wheelock Properties offered an initial 116 flats for sale at their joint venture The Austin, above the Austin MTR station in Kowloon, at a headline price of HK$ 22,875 per sq ft. Barclay's expects discounts and rebates of stamp duties to come to 20 per cent, making the effective selling price less than HK$19,000 per sq ft.

Sales at the two projects were brisk despite developers raising the prices on subsequent batches of flats released for sale.

Developers are expected to launch 11 mass-housing projects offering 9,902 flats this month and next, according to property agents.

Among the releases expected are Cheung Kong's Hemera, which is the third-phase release at Lohas Park in Tseung Kwan O; Henderson Land's The Hemispheres, in North Point; and Nan Fung's The Visionary, in Tung Chung.

" If developers want to find enough buyers, they will have to cut their asking prices by 10 to 15 per cent below the prices paid for secondary flats in the areas," said Louis Chan Wing-kit, the managing director for residential sales at Centaline Property Agency.

Chan said developers would have to cut prices of their luxury flats by 30 per cent to lure buyers under the government's cooling measures, while prices of new mass market flats would have to be cut by 15 to 20 per cent.

Patrick Chow Moon-kit, head of research at Ricacorp Properties, said developers would not offer stamp duty subsidies on the purchase of flats in mass residential projects. Buthe thinks the recent price cuts in the luxury market would extend to the mass market.

"The asking prices of new projects used to be 30 to 40 per cent higher than prices in the secondary market. But the price difference has now fallen to 20 per cent," he said.

Despite prices being cut at The Cullinan, sellers in the nearby mass housing market surrounding Kowloon Station had cut their asking prices by just 5 per cent, he said.

"Most of the flat owners would rather keep their flats for leasing than cut prices to lure buyers," he said.