Henderson Land

Billionaire Lee Shau-kee expects Hong Kong home prices to fall further, urges buyers to take advantage of discounts

PUBLISHED : Thursday, 02 June, 2016, 11:04pm
UPDATED : Thursday, 02 June, 2016, 11:04pm

Billionaire Lee Shau-kee, Hong Kong’s second-richest man, expects home prices in the city to remain under pressure, with about 10 per cent further downside to be expected before a bottoming pattern sets in.

The chairman of Henderson Land Development, speaking on the sidelines of the company’s annual general meeting, said home prices have been falling since the peak last year, and that the downtrend has further to go.

The Rating and Valuation Department’s monthly supplement released on Tuesday that the general price index for private homes rose 0.7 per cent month-on-month to 273.1 per cent in April. This was the first month of recovery after a decline over the prior six consecutive months. In the first four months of this year, the home price index accumulatively fell 4.17 per cent as buying momentum weakened.

Lee did not expect to see a price recovery from current levels.

“It will drop another 10 per cent or probably less before hitting the bottom,” said Lee, citing that prices had likely dropped 20 per cent from its peak last year.

According to the government data, home prices fell 10.78 per cent from the peak in September 2015.

An increasing number of analysis expected home prices will drop further, because of dim economic outlook.

Lee said prices were unlikely to fall sharply from current levels, citing high construction cost as a reason. However, Lee said it may be time for aspiring home buyers to take advantage of developers rushing to offer units for sale.

“If prices only drop up to 10 per cent, why not consider buying now?” said Lee.

To speed up sales, developers recently offered home loans of up to 80 to 95 per cent of a flat’s value, without the need for proof of income. Henderson was among the developers offering mortgage top-ups.

Lee said such financing arrangement would help buyers to acquire properties

Commenting on the stock market, he said the Hang Seng Index will likely hover in a range 10 per cent either side of the 21,000 level.

Lee acknowledged that business conditions in Hong Kong had hit a soft patch

“When businesses are not doing well, (companies) will lay off some staff. But (Henderson Land ) has no plan to axe any staff, not even one,” said Lee.