Harbour Park’s new flats see poor sales
HK property sales under pressure as stock and currency tumbles
Hong Kong’s falling stock and currency markets yesterday chilled the sales of Harbour Park, the first residential property project launched after market turmoil sent the local interest rate to a historical high.
Only eight units of Harbour Park, a small-unit property project in Cheung Sha Wan developed by Hong Kong Ferry, a subsidiary of Henderson Land, were bought in the morning, an agency source said. The developer declined to disclose the sales amount. The number of transactions in the afternoon was very low, it added.
Earlier local media reports said Hong Kong Ferry would open sales for 70 units of Harbour Park yesterday. The project is made up of small flats in sizes ranging from 204 to 275 sq ft, priced between HK$14,894 and HK$17,975 per square foot. The cheapest unit in this batch of sales cost HK$2.967 million after discounts, Hong Kong Ferry earlier said.
“The pricing of Harbour Park is reasonable. But ... investment sentiment has been severely hit by the stock market plummet and weak local currency,” said Sammy Po, chief executive of Midland Realty residential department. “People are getting more prudent when making decisions, particularly those who saw their wealth shrink in the stock market.”
Po said it was unlikely property sales would improve unless the stock markets saw an uptick.
Today, Henderson Land Development will offer its luxury project Wellesley on Mid-Levels for pre-sale to test the market. The company’s share price has plunged some 20 per cent in recent weeks, closing at HK$38.45 on Friday.
Dragged by concerns over the Chinese economy and a global sell-off triggered by fear of a financial crisis, Hong Kong’s benchmark Hang Seng Index extended a fourth consecutive week of losses last week. The index has tumbled about 13 per cent.
The Hong Kong dollar also extended a three-week fall as capital outflow continued after the United States’ interest rate increase took effect.
Following the weakening currency, local borrowing costs rose with overnight funding cost to a five-year high of 0.44 per cent on Friday. And the one-month Hong Kong interbank rate, or Hibor, rose to 0.39 per cent, according to the Treasury Markets Association, largely pulling up the mortgage rate, which meant bigger burdens for those who had financed their properties with loans.
Helped by flexible incentives from the developers, property sales in Hong Kong bounced back last month, but total sales volume was still 30 per cent down from the same period a year earlier.
Analysts expect home prices to enter a downward cycle that could last two to three years, with a cumulative drop of more than 30 per cent from its peak.