An unusual divergence of views has emerged over the direction of Hong Kong home prices

Government land sales have seemingly lost their role as a barometer for pricing in the secondary market, reflecting divergence between land developers and second-hand buyers

PUBLISHED : Tuesday, 22 November, 2016, 3:27pm
UPDATED : Tuesday, 22 November, 2016, 7:54pm

Hong Kong home sales in the primary and secondary residential markets are moving in opposite directions to the recent spectacular government land sale results as individual buyers stay sidelined in the wake of a higher stamp duty and an imminent US rate hike next month, industry experts say.

Agents say zero transactions were recorded in some major housing estates over the weekend even as a residential site in Kwun Tong that sold for a higher than expected price last Thursday.

Midland Realty said no deals were concluded in five out of 10 housing estates it monitored over the weekend. They were Taikoo Shing in Quarry Bay, South Horizons in Aberdeen, Laguna City in Cha Kwo Ling, Whampoa Garden in Hung Hom and Metro City in Tsueng Kwan O.

“Previously, owners will increase asking prices once government sites in nearby areas sold for high prices. But the sentiment has been changed as the hefty increase in stamp duty kept buyers away from the market,” said Ricacorp Properties director Willy Liu.

Previously, owners will increase asking prices once government sites in nearby areas sold for high prices
Ricacorp Properties director Willy Liu

He said developers are willing to pay a premium for land which would be offered for sale in the next three to four years.

“Their bids are unlikely be affected by existing market conditions,” he said.

On November 16, the Lands Department awarded the residential site in Kwun Tong to Wheelock Properties for a higher than expected price of HK$6.39 billion, about 3 per cent above the high end market expectation of HK$4.55 billion to HK$6.2 billion.

It was the first residential site offered for sale by the government since the introduction of a new stamp duty.

Hong Kong raises stamp duty to tame surging home prices in the world’s least affordable city

Wheelock said it planned to invest HK$12.5 billion, including the land cost, on the Sin Fat Road site close to the Lam Tin MTR Station. The site will yield a total gross floor area of 826,546 sq ft.

To speed up transactions, owners have to offer discounts or bigger room for negotiations, he said.

In the high-end sector, a 731 sq ft unit at Illumination Terrace in Tai Hang has changed hands for HK$11.6 million after the price was reduced by HK$400,000, according to Ricacorp.

Ken Lai, associate director at Midland Realty’s Tin Shui Wai branch said the firm has closed a transaction after the owner cut HK$130,000.

Over the weekend, he said a 544 sq ft, three-bedroom unit at Maywood Court, Kingswood Villas sold for HK$4.35 million, or HK$7,996 per sq ft.

“The second-hand market has frozen immediately after the new stamp duty, and buying interest has also been killed by an imminent US interest rise,” said Sammy Po, chief executive at Midland Realty’s residential department.

The government on November 5 raised the residential transaction stamp duty to 15 per cent for individuals and corporate buyer, except for first-time buyers, in a bid to tame runaway home prices.

Over the weekend, Midland Realty said the number of transactions plunged to eight among 10 housing estates it monitored, 20 per cent lower than the previous weekend.

“In the primary residential market, developers have postponed their project launches in view of a dramatic change in market sentiment. The focus is on selling remaining units for the rest of this year,” he said.