Lull in lived-in home market
Updated: 2015-09-15 08:15
By Oswald Chan in Hong Kong(HK Edition)
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According to Land Registry data, residential property sales in August slumped 37.3 percent to 3,896 transactions compared to a year ago and the total consideration for residential units tumbled 26.1 percent to HK$31.1 billion in the same period. Edmond Tang / China Daily |
Owners refuse to slash prices of second-hand homes while brand new properties are selling at a discount
Hong Kong's secondary home market transactions turned sluggish despite recent home price surges. While property developers trimmed first-hand property sales prices, owners putting up lived-in homes for sale were reluctant to cut prices.
Secondary home transactions in some districts turned sluggish in recent days, according to local real estate agents. For example, no second-hand homes were sold in Whampoa Garden in Hung Hom district in the last 15 days. In Nan Fung Sun Chuen, Quarry Bay, no secondary home transactions were recorded for 29 consecutive days.
This is because secondary homeowners expect home prices in Hong Kong to continue to rise to record-high levels despite the recent stock market rout, refusing to slash selling prices.
On the other hand, many property developers slashed selling prices when launching new residential projects, with the hope of cashing in before an expected US interest rate hike and the government's efforts to enhance land supply bring the prices down in the local home market.
The prices of first-hand properties were slashed to an extent that they are not that much more expensive than second-hand properties. Many potential local home buyers are therefore drawn to purchasing first-hand properties, leading to sluggish transactions in the secondary home market.
According to Land Registry data, residential property sales in August slumped 37.3 percent to 3,896 transactions compared to a year ago and the total consideration for residential units tumbled 26.1 percent to HK$31.1 billion in the same period.
The disconnect between sluggishness in secondary home transactions and recent home price surges may soon disappear if local home prices start to fall due to the increase in US interest rates and enhanced land supply.
The US Federal Reserve will meet on Wednesday and Thursday. However a US interest hike may be deferred until a December meeting, according to market speculation.
"We believe a reversal in interest rates (back to an upward trend from the current low levels) and a gradual pick-up in new supply will dampen the outlook for Hong Kong residential property prices," UBS said in its Hong Kong strategy report. "Residential home prices could plummet 33 to 39 percent by the end of 2016 from the current levels."
"We see a fundamental change in the city's private housing market due to increasing supply, narrowing price gap between new and existing homes and intensifying competition," Secretary for Development Paul Chan Mo-po said in his blog on Sunday.
Chan elaborated that 83,000 new residential units are expected to be ready in the next three to four years. In 2016, 20,000 private residential units will be ready for use, 70 percent higher than the average number in the last 10 years.
"Uncertainties in the macro environment, including a possible US interest rate rise, fragile economic recovery in Europe and Japan and downward pressure of the mainland economy will affect the local home market," Chan said.
oswald@chinadailyhk.com
(HK Edition 09/15/2015 page8)