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Hong Kong property

Buyers snap up flats in Hong Kong development, the Cullinan West II, ahead of possible US interest rate rise

On Saturday, more units of Sun Hung Kai Properties’ project on top of Nam Cheong MTR station went on sale, with units ranging from 272 to 1,509 sq ft

PUBLISHED : Saturday, 02 December, 2017, 9:01pm
UPDATED : Saturday, 02 December, 2017, 10:57pm

Buyers flocked to snap up more than 90 per cent of the units for sale in a Hong Kong residential project on Saturday, ahead of a two-day meeting by the US Federal Reserve to discuss a possible interest rate increase later in December.

On Saturday morning, 130 units of Sun Hung Kai Properties’ Cullinan West II project, sitting atop Nam Cheong MTR station, went on sale, with units ranging from 272 to 1,509 sq ft.

As of 5pm on Saturday, 119 units had been sold, according to market sources. The remaining units were mainly larger four-room units, which cost as much as HK$54.45 million (US$6.97 million). The cheapest unit was offered at HK$7.56 million, with just 272 sq ft of space.

Midland Realty residential chief executive Sammy Po said that small units offered today were very popular because “most of the buyers are purchasing the units for their own use”.

Po added that the prices of the larger units were very high, and thus were not as popular with buyers.

Louis Chan, Asia-Pacific vice-chairman at Centaline Property Agency, said he expected about 95 per cent of the units to sell.

A group of investors pooled together about HK$70 or 80 million to purchase two four-room units, which will be primarily used for investment purposes, Chan said.

After factoring in discounts of up to 20 per cent, the average price per square foot of the Cullinan West II units on sale this weekend is HK$21,152 – about 20 per cent more expensive than the first batch of units put on sale last week.

The US Federal Reserve is expected to meet on December 12 and 13, and is likely to raise the interest rate for a third time this year. This would mean higher rates for Hong Kong borrowers because the city’s monetary authority is obliged to follow US interest rate changes, since Hong Kong’s currency is pegged to the US dollar.

However, analysts and property consultants said that while an increase in local mortgage rates may slow price growth, the housing market is unlikely to suffer a slump as demand for housing still outstrips supply.

Amid the stratospheric prices in Hong Kong’s property market, the International Monetary Fund on Wednesday issued a report highlighting the risk of overvaluation in Hong Kong, the world’s most expensive property market.

It calculated that Hong Kong property prices saw a 15 per cent year-on-year rise in September, despite a series of measures introduced by the government to address the imbalance of supply and demand in the market.

“IMF staff analysis suggests that the degree of overvaluation has increased. The sensitivity of household debt to interest rate changes remains high as a significant portion of new mortgages are on floating rates and indexed to the Hibor.

“In addition, a disorderly housing market adjustment could have a significant impact on private consumption through negative wealth effects,” it said.

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