Few takers for flats priced above HK$10 million at Centra Horizon in Tai Po as buyers’ confidence takes a hit
- Billion Development and Project Management only managed to sell 160 out of 307 flats on offer at its housing project in Pak Shek Kok on Monday
Investors’ appetite for new flats priced above HK$10 million (US$1.27 million) is showing signs of waning as they are hesitating to dig deeper into their pockets for large units, fearing a prolonged US-China trade war could hurt economic outlook.
As of 5pm on Monday, developer Billion Development and Project Management only managed to sell 160 out of 307 units on offer at its Centra Horizon project in Pak Shek Kok, Tai Po, according to agents. Most of the units sold were priced below HK$6 million, with only a few takers for units costing more than HK$10 million, they added.
During the sale of the first batch at the end of April, investors snapped up more than 75 per cent of the 295 units on offer, waiting patiently in long, snaking queues outside the company’s sales office for a chance to buy a flat.
The cooling off in demand comes amid an escalation of tension between China and US.
The the world’s two largest economies are yet to reach an agreement to end the year-long trade war. Last week, the US increased tariffs on US$200 billion of Chinese imports to 25 per cent, sending Hong Kong’s benchmark Hang Seng Index down 5 per cent.
“The sudden rise in US-China tensions has put the brakes on the recent sharp and strong recovery as some buyers are afraid of further turmoil,” said Derek Chan, head of research at Ricacorp Properties.
Agents said a buyer who had booked a HK$14.3 million unit at the project on April 28 has forfeited HK$712,900 after deciding to renege on the deal last week.
Buyers flock to Centra Horizon’s property sale in Tai Po, in an overwhelming response that is a harbinger of rising home prices
The price of flats at Monday’s sale started at HK$14,004 per square foot after discounts, 10 per cent higher than those on sale last month.
But some buyers continued to put their faith in the city’s property market, shrugging aside the price increase and an escalation in trade tensions.
“The home demand is so strong here that prices will definitely continue to increase in the future,” said Yeung, a buyer who only gave his last name. He bought a one-bedroom unit at Centra Horizon for HK$5 million after unsuccessfully trying to get his hands on one in his earlier attempt.
Hong Kong, the most expensive city in the world, saw a correction in home prices between August and December last year. But since then prices of lived-in homes have risen for 13 consecutive weeks.
Centaline Property Agency’s Centa-City Leading Index – which reflects weekly changes in the secondary market – rose 1.17 per cent to 186.07 for the week ended May 10. The property broker expect the index’s previous record of 188.64 reached in August last year will surpassed by the end of this month.
“Negative news like trade war may cause fluctuations in the short term, but we see the overall trend of prices continuing to go up unless there is a large boost in supply,” said Ricacorp’s Chan. “Soon people will get used to the ups and downs of trade war and see such twists as normal.”
Last week, UBS said that Hong Kong’s property bull market has another 10 years to run, as housing supply fails to keep up with the new population pouring in from the Greater Bay Area.
