A look ahead: New homes expected to be the main driver of Hong Kong’s real estate sector
Prices remain under pressure in areas where many second-hand units are available, while the primary luxury market enjoys high demand because of limited supply
What can the local property sector look forward to in the remaining months of this year?
Property agents and analysts say that sales of new homes are expected to be the main driver of the local real estate sector.
Sales of new small to medium-sized units below HK$10 million have remained active this year and demand is likely to be sustained throughout the third and fourth quarters, property agents say.
One consultant expects buyers to be able to look forward to sweeteners from developers. Many also feel that the low-interest-rate environment will continue for some time as the massive fallout and economic uncertainty from last month’s referendum – in which the majority of Britons voted to leave the European Union – are expected to be felt this year and may spill over into 2017.
Thomas Lam, senior director and head of valuation and consultancy at Knight Frank, says that “pricing and packages offered by developers will be key to closing deals”, in addition to “developers offering mortgage [packages] to homebuyers”.
According to Lam, one example of high-volume sales is in Tseung Kwan O, where large-scale housing developments drew interest thanks to attractive prices and sales packages, covering discounts, mortgages and second mortgages. Some developers offered mortgages up to 95 per cent of the unit price. Lam says that the sweeteners allowed some buyers, who did not have enough money for the deposit, to get on the property ladder. He expects the decline in overall home prices to slow down in the second half of this year.
Joseph Tsang, managing director of Jones Lang LaSalle Hong Kong, sees a limited impact of increased housing supply on the primary market of small to medium-sized units, particularly those situated in urban areas where fresh supply is scarce.
