Sales of used homes in Hong Kong gain momentum as owners slash prices
- The number of transactions at 50 major private housing estates hit a 40-week high of 138 in the week ended February 3, according to Ricacorp Properties
- Total sales of all types of property that changed hands in January marked a six-month high of HK$70.53 billion, up 63.8 per cent from December
Sales of used homes on big housing estates in Hong Kong gained momentum last week as homeowners offered greater discounts and investment banks forecast house prices would hit a nadir in March.
The number of transactions at 50 major housing estates, tracked by Ricacorp Properties, stayed above 100 for a fourth consecutive week, reaching 138 in the week ended February 3, a 40-week high.
“Owners are less aggressive with their asking prices. Prices are generally down 5 to 10 per cent from the peak,” said David Chan, director of Ricacorp Properties. “Buyers know prices are lower so they are willing to go look for homes.”
For instance, a flat measuring 336 square feet at Golden Lion Garden was sold for HK$4.7 million (US$599,086) on Wednesday after the asking price was slashed by HK$490,000 in light of falling home prices.
The figure came after CLSA, Citibank and JPMorgan said home prices will rise by up to 15 per cent between April and December amid high market liquidity and pent-up demand from people new to Hong Kong.
Their predictions followed a 9 per cent drop in Hong Kong’s home prices from their peak in July and pushed 262 homeowners into negative equity in the fourth quarter last year. It was the first time in two years that some property values had dropped below outstanding mortgage loans, the Hong Kong Monetary Authority said last week.
But Chan said the number of transactions would be lower this week and next week since buyers and sellers would be too busy visiting relatives or travelling during the Lunar New year holiday period.
The overall sales volume of properties, including residential, commercial and industrial ones, in January marked a six-month high of HK$70.53 billion, up 63.8 per cent from the previous month, according to Land Registry data released last week.
The number of properties that changed hands in January was the highest in five months, at 5,583, up 83.8 per cent from December’s 3,038.
Richard Lee, chief executive of Hong Kong Property Services, attributed the surge to heated sales at the Grand Central development in Kwun Tong in December, which drove the number of new homes sold up by 4.5 times to 2,197.
Sino Land priced Grand Central at about 20 per cent below neighbouring projects.
Because of weakening demand, developers are having to offer extra sweeteners to drum up sales. For example, Wheelock Properties and Nan Fung Development offered discounts of up to 1 per cent to buyers of seven projects in total during the festive period. Henderson Land Development and Sino Land also offered discounts.
But January’s sales figures are still way behind what they were a year ago. The total number of transactions had plummeted 22.6 per cent year on year from 7,210, according to figures from Midland Realty.
“Market sentiment is still weak [compared to the market peak] so potential buyers were not very enthusiastic about buying,” Lee said. “It is not very high but [it means] there is still hope.”