Improved sentiment encouraging HK developers to speed up housing launches

One estimate suggests more than 2,500 units could become available this month, which would represent 40pc of new homes sold in the first six months

PUBLISHED : Tuesday, 12 July, 2016, 2:46pm
UPDATED : Tuesday, 12 July, 2016, 7:23pm

Developers are speeding up new launches in Hong Kong, to take advantage of the recent improvement in housing market sentiment.

But analysts said the expedited launch schedules will intensify the battle to lure home-seekers, and as a result this could quickly end the recovery and pull the sector back into a fresh downward cycle.

“Developers are expected to rush to offload their stocks in the second half as they have failed to meet six-month sales targets, plagued by the declining desire to buy, and poor market sentiment, “ said Derek Chan, head of research at property agent Ricacorp Properties.

His firm estimates new launches could involve more than 2,500 new units this month, which would represent around 40 per cent of the first-hand homes sold in the first six months.

They include The Met. Bliss (640 units) developed by Wang On Properties, the 1,128 unit Grand YOHO by Sun Hung Kai Properties and the 285-unit Park Mediterranean by Sino Land.

Developers will be cautious in their pricing, and are likely to launch a variety of incentives to lure buyers in the face of keen competition.

We are monitoring for any price war between developers. If buying desire weakens, developers could cut prices to lure buyers
Derek Chan, head of research at property agent Ricacorp Properties

“We are monitoring for any price war between developers,” Chan said.

“If buying desire weakens, developers could cut prices to lure buyers.”

Hong Kong’s housing market sentiment has improved, with government data showing home prices rose in both April and May.

The Rating and Valuation Department’s monthly supplement released late last month showed the general price index for private homes rose to 275.5 in May, up 0.73 per cent from April, when the index registered a monthly hike of 0.7 per cent on March.

However, Paul Chan, the Secretary for Development, however, wrote on his blog earlier that he disagreed the trend in Hong Kong’s property market had shifted, insisting the price data issued by the Rating and Valuation reflected market conditions in April and May, and did not accurately reflect current or future trends.

He said there was no need to relax property cooling measures.

Analysts expect home prices in the secondary market to slip in view of new launches.

“My concern is the macro economy in the second half,” said Thomas Lam, head of Valuation and Consultancy at Knight Frank.

“If the unemployment rate rises, that will hit home purchasing power and buying sentiment.

“The uncertainties explain why developers are rushing to sell right now.”

He said an influx of new supply onto the market, along with global economic uncertainties created by Brexit, could dampen demand in the second half year.