Yuen Long property sales in Hong Kong sluggish amid interest rate fears
Only half of flats on sale at new projects were bought amid interest rate fears
Hong Kong's two biggest developers cashed out only half of the flats on offer, as the break-up of a home price rally and a pending interest rate rise in the US took its toll on buying sentiment yesterday.
Around 141 out of 238 homes on offer at Yuccie Square in Yuen Long, developed by Cheung Kong Property Development, found buyers by 7pm, the company said.
Park Vista, also in Yuen Long, offloaded 123 units, leaving 146 units untaken, according to developer Sun Hung Kai Properties, which pocketed HK$740 million from the sales.
The selling price for Park Vista flats ranged between HK$9,076 and HK$12,388 per square foot.
Yesterday's sales were in stark contrast with those a week ago, when 80 per cent of Yuccie Square flats were sold on the development's launch.
The lukewarm response came on the heels of concrete evidence that the city's property boom was over.
The official home price index released on Friday logged the first drop in 19 months. The gauge contracted 1.11 per cent month on month to 302.6 in October, after peaking in September.
Small units in the New Territories, where the Cheung Kong and Sun Hong Kai projects are located, suffered the biggest decline - by 5.43 per cent to HK$9,470 per square foot.
"The [Saturday] sales are not desirable but within expectations. Even the developers themselves have lowered their expectations in view of the latest government data," said Louis Chan Wing-kit, managing director at Centaline Property Agency.
"Investors are clearly concerned about the increasing likelihood of an interest rate rise in the US, which will prompt a further correction," he added.
The world's largest economy added 211,000 jobs last month, a solid number that topped expectations and could pave the way for the first interest rate rise in almost a decade.
The US Federal Reserve will convene on December 15-16, its last window this year to tighten the monetary base after holding back several times.
Bocom International property analyst Alfred Lau expected the city's home prices to fall 20 per cent should there be an interest rate rise.
Sammy Po Siu-ming, chief executive in Midland Realty's residential department, said the fresh data, either local home price falls or US job growth, were only proving what had been expected for a long time.
"Buyers have already been exercising caution given the expected correction in the property market, the macroeconomic uncertainty into next year and a stock market crash earlier this year that curtailed investors' purchasing power," he said.
