Previously-owned property market in Tseung Kwan O goes quiet after developer price cuts
Secondary market transactions in the area fell by 50 per cent over the weekend
Sales volume and prices in the secondary residential market in Hong Kong’s Tseung Kwan O district are expected to remain under downward pressure amid abundant supply in the area, according to industry experts.
Market activities in Tseung Kwan O turned quiet after Wheelock Properties on Thursday released its Savannah development at prices starting at HK$3.51 million, the lowest for new flats in the area in three years.
Kelvin Fan, an associate director at Hong Kong Property Services (Agency) Tseung Kwan O branch said the number of second-hand home transactions dropped to 10 over the weekend, compared to 20 during the previous weekend.
“Most prospective buyers will turn to the primary market as prices are lower and developers also provide the first mortgage to facilitate the purchases,” he said.
Joseph Tsang, managing director at JLL Hong Kong said developers will adopt competitive pricing in order to increase sales.
“Low prices, coupled with more sweeteners are major tactics being adopted by developers to boost sales. There is no healthy competition in the market,” he said.
Tsang said the secondary market will suffer a lot if developers continue launching new projects at low prices.
Together with 804 units at the Savannah development, there will be more than 2,300 units from another three projects near each other pending release in the southern part of Tseung Kwan O.
“The secondary market in Tseung Kwan O will suffer most and prices could drop further until the market digests all the new supply,” he said.
Thomas Lam, head of valuation and consultancy at Knight Frank, said there will be around 108,000 new homes coming on line from 2016 to 2020, representing about 21,600 units per year on average.
“Most supply will be in the New Territories, clustering in Yuen Long and Tseung Kwan O. It is expected to bring downward pressure on second-hand home prices in the areas,”he said, “In Kowloon, supply will concentrate in Kai Tak.”
Alvin Ma, associate director at Midland Realty’s Tseung Kwan O branch, said the market has been talking about over supply in the area for more than a decade.
Ma, who has been stationed in Tseung Kwan O for 15 years, said the area’s improved infrastructure has attracted end users and tenants to move in from the eastern part of Hong Kong Island and Kowloon East.
“Savannah will certainly lock up tremendous buying interest as there are no new units on offer at below HK$4 million in the area,” he said.
Fan said more than 4,000 units from eight residential projects in the southern part of Tseung Kwan O had been sold in the past three years.
There are about 250 units left unsold at the moment, he said, pointing out there is no pressure on developers to clear the stockpile.
The low price coupled with 80 per cent mortgages for three- and four-bedroom flats which involve bigger lump sums has proved efficient. Wheelock Properties on Tuesday signed up more than 2,500 prospective buyers for the 362 units. Wheelock Properties released the first batch of 161 flats at Savannah at discounts of 15.5 per cent to 19.5 per cent, and offering an additional 201 units on Tuesday at the same price. The units will be released for sale on Saturday.
With discounts of up to 19.5 per cent, the cheapest flat, a 310 sq ft unit, will cost HK$3.55 million. But buyers who are previous purchasers of Wheelock flats or who buy more than one unit will receive an additional 1 per cent discount, taking the price for the unit down to HK$3.51 million.
The first batch of Savannah units, ranging from 288 sq ft to 748 sq ft, have been priced at HK$4.21 million to HK$11.87 million. Factoring in a maximum discount of 19.5 per cent, prices will range from HK$3.51 million to HK$9.56 million, or HK$10,310 to HK$12,971 per square foot.