Hong Kong’s home sales slump on weakening take-up
Total sales value of residential deals falls 32.81pc to HK$22.52 billion.
Property sales in Hong Kong slumped to 19-month low in October, and analysts predict the worst is yet to come as take-up weakens at new launches and home-buying sentiment softens.
The slump in total sales volume accelerated, with sales down 43.63 per cent year on year last month, compared with September’s drop of 31.6 per cent.
“It is the worst October result since we started recording data in 1991,” said Buggle Lau, chief analyst at property agent Midland Realty.
Overall transactions in October fell 17.85 per cent from the previous month to 4,491, following a modest recovery in September, according to the Land Registry.
In September, total property transactions rose 5.2 per cent month on month to 5,467.
Residential transactions fell 22.6 per cent last month to 3,300, from September’s 4,263, as the take-up rate in primary launches weakened, while sales activity in the secondary market was painfully quiet.
The total sales value of residential deals fell 32.81 per cent month on month to HK$22.52 billion.
“There were 2,035 transactions recorded in the secondary market,” said Derek Chan, head of research at property agent Ricacorp Properties. “The situation was even worse than the market when Hong Kong was hit by the severe acute respiratory syndrome (Sars) outbreak in 2003.”
Chan said monthly transactions in the secondary market averaged 3,478 in 2003, with the lowest number – 2,505 deals – seen in February of that year.
He said he expected the market would be clouded by cautious sentiment, with total sales volume likely to hit the 3,800 level when the Land Registry announced the November figure next month.
As there is usually a lag between a transaction and its registration, the October figures reflect the market in September to early October.
Lau said sales of new homes dropped 12 per cent month on month in October to 1,409宗units, down from September’s 月1,602宗units.
An increasing number of analysts are predicting Hong Kong home prices will start to fall next year, with some expecting a decline of 30 per cent by 2017 as interest rates rise, supply increases and the economy deteriorates.
The city’s supply of private homes is projected to reach 86,000 flats in the coming three to four years as the government accelerates land sales, according to government data. The supply trend, which represents a record in private homebuilding, is expected to put house prices under pressure.
According to investment bank Barclays, home prices are now down 2.7 per cent compared to their mid-September peak.
“Should home prices continue to fall in the coming weeks, this could tip the home owners’ and home buyers’ sentiment mindset into bearish territory and potentially speed up the pace of the physical market’s correction,” it said in its latest research report.
To stimulate buyer interest, developers are continuing to launch aggressive financing offers. Small developer Easyknit Enterprises said on Tuesday buyers of its finished Paxton development in Prince Edward Road West could take as long as a year to complete purchases after making a 10 per cent down-payment.