Numbers of new private homes on Hong Kong market hit a 14-year high, as property prices continue to drop
- Quarter-on-quarter figures are highest since January 2005
- Government says figures are a result of its market-cooling measures but analysts say there are several factors at play
The number of new private homes approved for sale in Hong Kong in the last quarter hit a 14-year record high after a market-cooling measure took effect in June, according to the government.
The news came as prices in the world’s most expensive property market continued to drop, with those of properties on the pricier Hong Kong Island suffering a bigger dip.
According to a paper provided to the Legislative Council’s housing panel on Friday, the Lands Department issued consent to developers to sell 12 uncompleted residential projects, comprising 6,979 flats, from July to end of September.
The quarter-on-quarter number was the highest since January 2005. Four of those projects have already been launched for sale.
The authorities will continue to monitor pre-sale activities “to ensure orderly implementation” and will “remain vigilant in the property market and the evolving external environment”, the paper reads.
The department’s tightening of the so-called consent scheme, intended to ensure the timely release of first-hand flats, was among six housing initiatives announced by Chief Executive Carrie Lam Cheng Yuet-ngor in June.
Since June 29, developers have been required to sell at least 20 per cent of the total number of units at each turn of sale, including those sold through tender.
Developers failing to comply will receive a warning; they will have their consent cancelled in case of a subsequent breach.
The scheme, which was designed to protect consumers, allows the director of lands to ensure developers have complied with a set of requirements before granting them permission to sell the property under construction.
Developers have to obtain building approval, show that they have sufficient capital to complete the projects and submit contents of the sale brochures for scrutiny, among other requirements.
While government officials might attribute the rise in the number of flats approved for pre-sale to their new measure, some analysts say it was rather an accumulated result of past measures to increase land supply.
“I don’t see a necessary causal relationship between having more flats ready for sale and the tightening of the consent scheme,” Wong Leung-sing, senior associate director at the estate agency, Centaline, said. “Developers are selling more flats also because land supply was increased in the last few years by both the previous and current administrations. This includes the increase in land sales.”
Sammy Po Siu-ming, CEO of Midland Realty’s residential division, agreed.
Some of the projects were submitted for sale approval before the measure took effect, he believed, because it usually takes a from few months to two years for a developer to obtain the pre-sale consent.
Wong also warned that the government should keep its market-cooling measures under close watch as the market has already been showing signs of decline for weeks.
On Friday, the CCL home price index for the secondary market dipped by 0.58 per cent week on week to 183.7, according to Centaline.
The agency also noted a 1.54 per cent drop in prices of major second-hand residential estates on the more expensive Hong Kong Island, the biggest dip in 14 weeks.
Separately, a HK$550 million (US$70 million) government scheme for handing out more generous rehousing and compensation terms for northern New Territories villagers forced to make way for new town developments opened for applications on Thursday. Applications will remain open for one year. More than 8,000 households could benefit from the measure.