Supply of new flats in Hong Kong to more than meet demand this year, but concerns remain on the horizon
Most of the new supply to come up in Tseung Kwan O, Tai Po and Tuen Mun
Property buyers in Hong Kong will have plenty of choices this year as total supply of new flats will touch 35,000, with small units widely tipped to do well, despite rising prices and an anticipated increase in mortgage rates, according to market watchers.
“Flats costing less than HK$6 million (US$768,000) will be popular among first-time buyers,” said Vincent Cheung, deputy managing director for Asia valuation and advisory services at Colliers International.
Most of the new supply will be available in Lohas Park in Tseung Kwan O, Tai Po and Tuen Mun.
With plenty of supply, flats close to MTR stations are expected to be more resilient should there be any abrupt changes in market conditions if historical trends are taken into account.
Sammy Po Siu-ming, chief executive of Midland Realty’s residential division, noted that new projects such as Lohas Park development close to Lohas Park MTR station, could enjoy high growth in the long term compared to housing estates in other locations. This year more than 6,500 new flats will be available for pre-sale in Lohas Park.
According to JLL, after the opening of the Whampoa and South Horizons MTR stations at the end of 2016, property prices in Kowloon’s Hung Hom, including Whampoa Garden and Laguna Verde, increased by as much as 20 per cent last year, while on Hong Kong Island, housing prices at South Horizons in Ap Lei Chau jumped by as much as 15 per cent.
Other housing estates that have witnessed double-digit price growths have MTR stations nearby. These include City Garden in North Point, where prices surged by 20 per cent in 2017, while Residence Oasis at Hang Hau and Ocean Shores at Tiu Keng Leng stations enjoyed growth of 15 per cent.
Agents said those with a budget of about HK$6 million have few choices in the secondary market as prices had risen by about 14 per cent in 2017.
“Small flats and those in a relatively lower price range have particularly high potential when their values start to catch up with those in other districts where there is strong demand,” said Po. “Examples include Kingswood Villas in Tin Shui Wai, City One in Sha Tin and Tsuen Wan Centre in Tsuen Wan.”
Based on the latest transaction records from Centaline Property Agency, a 635 sq ft unit at 22-year-old at Kenswood Court in Kingswood Villas fetched HK$5.8 million.
The housing market remains upbeat despite the rising supply of new flats, forecast of a further 10 to 20 per cent jump in prices this year and increase in mortgage rates. In November, secondary home prices in the city rose for a 20th month in a row.
According to Buggle Lau, chief analyst at Midland Realty, the exact number of units that will go on sale still depends on developers’ marketing strategy.
“Developers release their new projects according to the market sentiment,” Lau said.
In recent years developers have put up about 20,000 new flats and have managed to sell nearly 17,000 of them had been sold, but last year buyers snapped up close to 19,000 new flats on the back of strong demand.
And with demand expected to remain strong, analysts expect sales of new flats this year to rise by 5 per cent compared with 2017.