Fear of interest rate rise and high prices hit latest Hong Kong property sale
But still, three projects alone have pulled in US$1.46 billion worth of sales in the past two weeks
Sales at the Fleur Pavilia luxury residential project by Hong Kong property firm New World Development in the city’s North Point district slowed towards the end of the day on Tuesday, a brief respite in what has been a hectic market over the past fortnight.
With an imminent interest rate rise likely – the US Federal Reserve will host a two-day meeting from Wednesday and is expected to announce a quarter-point increase – experts said buyers could have become more worried over meeting increased monthly financial mortgage payments, since Hong Kong’s currency peg to the US dollar means the city’s borrowing rates rise with any US increase.
As of 7pm, less than half, or 131 units out of the 300 up for grabs at Fleur Pavilia, had been sold, at an average price of HK$24 million (US$3.1 million) each. Together with the previous sale last week of 237 units, New World said it had pulled in HK$9 billion in sales revenue from the project.
Sammy Po Siu-ming, chief executive of Midland Realty’s residential division, said frequent sales of new property and high prices had led to the slower response.
“One-bedroom flats have become less popular because of the high prices. Potential buyers of these flats do not have a large budget,” Po said.
A typical one-bedroom, 548 sq ft flat at Fleur Pavilia costs HK$14.3 million after factoring in a 20 per cent discount offered.
Prices for the latest batch of Fleur Pavilia, which attracted more than 1,400 registrations of interest, have increased by 8 per cent to an average of HK$30,690 per square foot.
Hong Kong developers have pulled in some HK$11.4 billion in sales from three developments in the past fortnight alone, possibly stretching market liquidity. The three are Fleur Pavilia, K Wah International’s Solaria in Tai Po, and Henderson Land Development’s Cetus Square Mile in Tai Kok Tsui near Kowloon’s famous Mong Kok shopping area.
One agent told the South China Morning Post that one of the deals at Fleur Pavilia on Tuesday involved the purchase of two three-bedroom flats for about HK$50.6 million, while another involved a four-bedroom flat sold for HK$57.9 million.
At Cetus Square Mile meanwhile, 180 flats have sold for about HK$1.1 billion in total over the past two weeks, while some 506 flats have been sold at Solaria for a total of about HK$4.4 billion over the same period.
Knight Frank reported on Monday that Hong Kong led its Global House Price Index in the first quarter of this year, with average prices ending the 12 months to March up 14.9 per cent.
The index tracks movements in mainstream residential prices across 57 markets using official data.
Hong Kong has held the index’s top spot on 10 different occasions since it was first published in 2008, – more than any other market tracked.
According to Nicholas Holt, head of research for Asia-Pacific at the consultancy, while most Asia-Pacific markets saw moderate house price growth in the first quarter of this year, Hong Kong’s 4.6 per cent quarter-on-quarter and 14.9 per cent year-on-year growth made it the fastest riser globally over the last 12 months.
Separately, a subsidiary of Hong Kong Ferry (Holdings) Company has won the contract for the Tung Chau Street/Kweilin Street redevelopment project in Sham Shui Po for about HK$1.03 billion, according to the Urban Renewal Authority on Tuesday.
With a gross floor area of 144,345 square feet, the price per square foot was about HK$7,130.
Analysts said the price was slightly lower than expected, and they cut their estimate of the price that flats could be sold at to HK$20,000 per square foot, down 9 per cent.