As the market looks to Wednesday's policy address in hope the "spicy measures" to stabilize the property sector may be removed, developers are offering new payment methods to speed up sales of unsold flats at completed projects amid a high-interest-rate environment.
Among their efforts is "move in now, pay later" - a plan that allows buyers to take possession of the flats before making the payments in full by up to two years.
Instead of applying for a mortgage that comes with an interest rate of up to 4.125 percent right away, purchasers can now "rent" properties from developers after making down payments. All rental payments made during the period go toward offsetting outstanding payments when a transaction closes.
At least 20 deals were struck under these plans over the past three months, including five at Billion Development and Project Management's Centra Horizon in Pak Shek Kok and two at Villa Lucca, a luxury joint project of Hysan Development (0014) and HKR International (0480) in Tai Po.
In To Kwa Wan, Grand Ming (1271) has also launched its 720-day Easy Early Move-in Payment Plan for buyers of its completed The Grands development, under which they can delay payments of up to 90 percent of a transaction price by as much as 720 days.
Purchasers of Henderson Land Development's (0012) One Innovale series in Fan Ling can apply for early occupancy as well if they pay 15 percent of the price of a property in advance and complete the transaction within 240 days.
Industry insiders believe these plans help accelerate sales in a weak market by helping buyers who are slightly short of capital to get on the property ladder and ease the pressure of mortgage repayments when the loans are secured in the future.
In addition to "move in now, pay later" plans, homebuilders also offer short-term mortgages with low rates.
One Soho in Mong Kok - codeveloped by Sino Land (0083), Chuang's Consortium International (0367) and the Urban Renewal Authority - revealed in its latest price list last week, a 360-day payment plan and a three-year mortgage plan of up to 80 percent of the price.
Buyers, who are not required to pay any principal in the three-year period, also enjoy an interest payment holiday in the first year and only need to repay the interest in the second and third years at the prime rate minus
3 and 2 percent, respectively.
The lure of avoiding paying high-interest expenses amid high rates also caused purchasers of flats under construction to go in for stage payment methods or deferring mortgage applications until the properties are completed.
This was evident by the proportion of buyers opting for stage payments, which was up to 80 percent of total deals at a number of uncompleted properties put up for sale recently.
Due to the rises in interest rates, mortgage repayments have become considerably higher than before, said Sammy Po Siu-ming, chief executive of Midland Realty's residential division for Hong Kong and Macau.
However, the rates are expected to peak soon and might be cut next year, making stage payments a favorable choice for buyers at the moment, he said.
While a deferred payment plan runs the risk of one not being able to borrow enough for a transaction if prices go south, another big drop in prices is unlikely after the recent adjustments, Po noted, adding that he expects buyers to continue to prefer stage payment plans when they purchase homes in the future.
