Lacklustre Hong Kong new home sales could be boosted by US Federal Reserve interest rate cut
- Sales of new homes could rise by about 4 per cent, Midland Realty’s Sammy Po says
- Definite positive for homeowners, as mortgage costs will drop, mReferral Mortgage Brokerage Services’ Sharmaine Lau says
A potential cut in interest rates by the US Federal Reserve in the second half of 2019 will boost sales of new homes in Hong Kong, which have suffered amid an escalating trade war between the United States and China, according to industry observers.
Sales of new homes could rise by about 4 per cent to 2,500 in June, said Sammy Po, chief executive of the residential division at Hong Kong brokerage Midland Realty.
“A rate cut is positive in light of the recent downbeat sentiment. There will be major new project launches in June. It can stimulate the release of some purchasing power,” Po said. “Depending on pricing strategy, the sales percentage could be up to 80-90 per cent. They can even sell out first batches.”
The recent sales of new property in Hong Kong have been less than impressive. On May 25, Hong Kong developer Wang On Properties managed to sell only two out of the 86 apartments at its Maya by Nouvelle project in Yau Tong, a far cry from the frenzy on March 23, when it sold 73 per cent of the 99 available units.
Po’s comments came after Richard Clarida, the Fed’s vice-chairman, opened the door to a cut in rates – if there was low inflation and global economic risk – in a speech in late May.
“In a low interest rate environment, the sales response will … be good, with oversubscription [of registrations of interest over the number of apartments on offer],” said Sharmaine Lau, chief vice-president at mReferral Mortgage Brokerage Services. “When new projects are launched, buyers will have greater confidence, as interest will be cheap.”