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Hong Kong property

Hong Kong’s second-quarter home completion quadruples to 5,000 units, pointing to a glut

Second quarter data shows 5,000 flats completed, bringing total new housing supply for the half year to 6,200 units

PUBLISHED : Friday, 27 July, 2018, 2:38pm
UPDATED : Friday, 27 July, 2018, 11:41pm

The number of completed flats was up 317 per cent in the April to June period from the previous quarter, adding pressure on developers to speed up sales over the next several months in anticipation of the government’s proposed vacancy tax to deter hoarding and increase supply.

The number of finished private flats rose to 5,000 for the three months through June, up from 1,200 in the previous quarter, according to the Transport and Housing Bureau’s quarterly data released on Friday.

Taking into account 1,200 new flats in the first quarter, the total supply will be 6,200 in the first half of the year.

“Home price growth will slow in the second half of this year as more new flats go on sale,” said Buggle Lau Ka-fai, chief analyst at Midland Realty.

He expects an estimated 3,900 completed units would be ready for sale by the end of this year.

Prices of pre-owned flats increased by 0.24 per cent during the week ending on July 21, according to Centaline Property Agency’s Centa-City Leading Index, the slowest growth in the past 10 weeks.

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The number of completed, unsold flats should remain little changed as developers have begun to step efforts to offload their inventories in the expectation that the vacancy tax will eventually be passed into law.

Government data showed 9,000 unsold units in completed projects as of June, while 93,000 new flats will be available for pre-sale over the next three to four years. Major projects to be completed soon including the 1,008-unit Upper East in Hung Hom and the 900-unit K. City in Kai Tak area.

“There will be no impact on housing prices in the short term, but there should remain concern around long-term housing supply, “ said Cliff Tse, regional director of valuation advisory services at JLL.

Patrick Tsang, a senior sales director at Centaline Property Agency’s Taikoo Shing branch said potential buyers have become more cautious in the past month.

“Sales volume has slowed this month as some of our clients took a wait-and-see attitude after seeing volatile trading in the stock market,” he said.

Developers accelerated their pace of construction in the second quarter, according to government data. The number of construction starts for residential developments rose to 9,000 units in the second quarter, up from 5,600 in the first quarter.

Some developers have recently started to lower their asking prices on new projects as the market outlook has softened amid government measures to cool the market and as concerns surface of a deepening trade war between China and the US.

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“We believe there will have 18,200 new flats completed this year, ” said Lau, adding that more than 78 per cent or 14,300 units had been pre-sold by the end of June.

The median price of a private home in Hong Kong has been rising for the past 26 months, forcing home seekers to chase after more affordable government-subsidised flats.

On Thursday, a 566 square foot unit at Hin Keng Estate, a public housing estate, in Sha Tin changed hands for a record HK$6.65 million (US$847,347), or HK$11,749 per sq ft. Public housing can be sold on the open market after owners pay a premium based on market prices, which could be up to 60 per cent of the property’s value.

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