Price rises in Hong Kong homes seen driving buyers to new builds
The sustainability of price rises that began last month for older homes is in doubt amid fears they will cool deals and send buyers to new builds, say industry experts.
With the overall improvement in sentiment in stock markets and no changes in United States interest rates, home owners have raised their asking prices in a bid to maximise their gains.
“Owners are either cutting any discount or withdrawing their units from sale in view of the strong buying momentum. It will drive home seekers to the primary market,” said Hong Kong Property Services chief executive Richard Lee Chi-sing.
Developers will likely provide more incentives, such as financial aid, to drum up sales in the highly competitive market.
Lee expected sales momentum in the secondary residential market to slow down in coming months.
Home seekers may be looking to buy after the Hang Sang Index hit a nine-month high to 22,932 points on Monday, as depressed global interest rates pushed investors to hunt for yields in emerging markets.
Two major mass residential projects have seen strong initial responses from potential buyers.
Wang On Properties on Sunday released the second batch of 130 units at Met Blossom in Ma On Shan, raising the total number available for sale to 260. The developer raised prices for the latest batch by 2 per cent for an average cost of HK$13,605 per square foot after factoring in discounts of as much as 10 per cent.
The project has attracted market attention as one of the 260 flats were being offered for HK$2.76 million after discounts, the smallest lump sum price for a private flat in Ma On Shan.
More than 2,300 people registered interest in the 260 units so far.
Sun Hung Kai Properties signed up more than 850 potential buyers for the Lime Gala housing project in Shau Kei Wan. Factoring a maximum 9 per cent discount, average prices will be HK$18,384 per square foot. The cheapest and smallest unit covers 281 square feet and is on sale at HK$5.49 million, or HK$17,800 per square foot. SHKP has not finalised the official sale date yet.
“We believe average selling price uplifts and rebate or commission cuts reflected improved market confidence amid eased rate hike expectation, which in turn encouraged developers to push out more units,” said Alfred Lau, a property analyst at Bocom in a research note.
“Upcoming new projects will continue the restrained pricing strategy, in our view, considering the abundant supply pipeline, especially in New Territories,” Lau said.