Britons grab chance to buy off-plan as bid to boost housing market pays off
London properties may no longer be marketed so heavilyin Hong Kong as moves to boost the market start to bear fruit
Fewer British housing developments may be marketed in Hong Kong in coming years, because growing numbers of Britons are buying off-plan, according to economists and developers.
Economic recovery, rising mortgage lending, and programmes aimed at stimulating the market are also boosting demand from local buyers for new homes, especially among first-time buyers.
The government housing stimulus package includes the "Help-to-Buy" scheme that assists buyers with raising deposits and mortgages. The government provides equity loans to first-time buyers equivalent to 20 per cent of a property's value and makes loans available on new-build homes valued at £600,000 (HK$7.28 million) or less.
Ten thousand first-time buyers have taken out equity loans on new-build homes since Help-to-Buy was launched in April and Matthew Pointon, property economist at Capital Economics, said fewer residential developments would be marketed abroad if demand from British buyers kept rising.
"If developers can achieve sales here they will do so, and that is why they have been promoting schemes so heavily here," said Pointon. "You can't pass a building site now without seeing the advertising hoardings promoting the development."
Hong Kong demand for central London property remains strong, but increased competition from British buyers is likely to reduce their market share, said Liam Bailey, global head of residential research at property consultancy, Knight Frank. The upturn in Britain's economic fortunes was contributing to rising numbers of Britons buying new homes, including in London, a market dominated by overseas investors.
"In central London there are more UK buyers than a year ago, but this is more related to the improvement in the UK economy and growing consumer confidence which, indirectly, has been aided by Help-to-Buy," he said.
The Organisation for Economic Co-operation and Development (OECD) last week doubled its GDP growth forecast for Britain from 0.8 per cent to 1.5 per cent this year. And Bank of England figures show mortgage approvals leapt from 58,238 in June to 60,624 in July, the highest level since March 2008, the peak of Britain's last property boom.
Developer Alchemi launches many of its projects in Hong Kong. These include 55 Victoria Street, a central London development of 54 apartments priced from £ 695,000 (HK$8.43 million) which it unveiled at the Landmark Mandarin Oriental Hotel on September 7. But it may start marketing more schemes in London first if the number of Britons buying off-plan continues to grow and reaches levels recorded during the last property boom, said Jonathan Whittle, sales director at Alchemi.
Prices for new-build homes may rise faster than for second-hand properties during market cycle.
The consultancy Capital Economics forecasts the premium on new homes will rise from 15 per cent to 18 per cent, as a result of the equity loans scheme boosting demand.