Policy fallout looms for secondary sales

Education | Staff reporter 12 Jul 2018

Sales in hong kong's secondary market have slowed down substantially due to a combination of factors, like steady releases by developers, new housing policies and, to some extent, the fallout on investor sentiment from the onset of the US-China trade war.

The volume of transactions in the top 100 housing estates tumbled by about 60 percent in recent weekends and only eight deals were recorded last weekend, according to local reports.

Kevin Wong, senior regional manager at Many Wells Property Agent, said a 501-square-foot two-bedroom flat on a high floor of the seventh tower at Sun Tuen Mun Centre recently sold for HK$6 million or HK$11,976 per sq ft, a record high relative to other transactions in the area.

He expects up to 30 more flats, priced from HK$5.5 million to HK$6.28 million, in the housing development to change hands.

Meanwhile, a one-bedroom 363-sq-ft flat on a lower floor of 2A tower at the Wings IIIA in Tseung Kwan O changed hands for HK$7.07 million or HK$19,530 per sq ft, a record high in the area.

In Sha Tin, a 544-sq-ft flat at Ravana Garden sold for HK$9.35 million or HK$17,188 per sq ft.

The flat originally featured three bedrooms but it was later converted into a two-bedroom apartment.

Midland Realty chief executive Sammy Po Siu-ming said developers will accelerate flat sales now that new housing policies have been put in place.

That will shift the market's focus to the first-hand market and further cool down activity in the secondary market.

Louis Chan Wing-kit, Asia-Pacific vice chairman and chief executive of the residential division at Centaline Property Agency, said sales of starter homes shrank significantly since the government recently announced the new housing policies.

Investors have become more cautious with the introduction of new policies and amid uncertainties over the US-China trade war, he said.

In spite of uncertainties, sales in the primary market this month are expected to reach about 2,500 units, a 25 percent increase from June and a new high in 15 months, Chan said.

The volume of sales in the primary market in the second quarter rose 9 percent to 4,100 from the first quarter, marking the second consecutive quarter of growth.

Two- to three-bedroom flats priced between HK$6 million to HK$12 million were the most popular among homebuyers.

Some analysts said more new policies could help stimulate sales of both first-hand and second-hand flats as demand for housing remains robust.

Demand will be stronger for small flats that require lower down payments and investments.

Bank loans for three- to four-bedroom flats, priced at HK$10 million or more, will be only around half of the price of these high-priced properties.

While stricter bank lending will likely slow down activity in the luxury residential segment, this will hardly be a concern to homebuyers with ample capital.

Vincent Cheung, deputy managing director of valuation and advisory services for Asia at Colliers International, said starter homes, especially those below HK$6 million, will be of the most interest to homebuyers.

Leo Cheung Sing-din, corporate development director for valuation and property management at Pruden, a property services firm, said he expects about 7,000 sales in the primary market in the second half.

He said activity in the primary market in the second half will remain stable in spite of fluctuations in the local stock market and uncertainties from the US-China trade war.

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