Caution shows in bank valuations

Property | Staff reporter 9 Sep 2021

Banks have become more cautious with their valuations for units in housing estates as second-hand property transactions fell slightly in the past month because of high prices.

Although 12 out of the 20 blue-chip estates saw increases in valuations ranging from 0.1 to 4 percent last month, both the increase and the number of housing estates involved have slowed from July.

At the same time, valuations for homes in five estates, including Mei Foo Sun Chuen in Lai Chi Kok and Kingswood Villas in Tin Shui Wai, have declined, down between 0.8 and 7.4 percent, mostly in small and medium-sized units.

Statistics from the Rating and Valuation Department show that the private property price index has risen for seven consecutive months to a two-year high, with a cumulative increase of about 4.3 percent - only 0.2 percent lower than the historical high.

City Garden in North Point saw the largest rise in valuations last month, as could be seen by a 4 percent increase for a 581-sq-ft unit from HK$10.74 million to HK$11.17 million, followed by a 3.6 percent jump in a similar-size unit at Metro City in Tseung Kwan O.

Ricacorp chief executive Willy Liu Wai-keung said the increase in valuations for City Garden, Metro City and Telford Garden flats came because previously transaction volumes at the three estates were small and investors were chasing the market.

It will take time for property buyers to recover from recent stock market fluctuations and the release of pent-up purchasing power in the first half of this year before they get back on the buying track

Prices have been close to the historic high and are now struggling to keep up the momentum. Coupled with the effects of the emigration wave, the prices of small and medium-sized units are slightly under pressure, Liu added.

Kingswood Villas in Tin Shui Wai and Nan Fung Plaza in Tseung Kwan O, among the top three gainers in July, performed relatively poorly last month.

Bank valuations for a 458-sq-ft unit at Kingswood Villas fell by about 4.3 percent to HK$4.85 million. A 697-sq-ft flat at Nan Fung Plaza also saw a decline, offsetting part of an increase the previous month.

And Tsuen Wan Centre ended up as the worst performer.

A 377-sq-ft flat there was valued at HK$5.36 million in August, tumbling by about 7.4 percent from July, and lost the increase it saw over the past three months.

Alex Leung Pui-wang, a senior director of CHFT Advisory and Appraisal, said it was worth noting that increases for units of between 450 and 600 sq ft on Hong Kong Island, Kowloon and Tseung Kwan O were relatively prominent last month, as shown by bank valuations.

There were huge increases in the values of small units earlier, which have now undergone a slight adjustment.

Vincent Cheung Kiu-cho, the managing director of Vincorn Consulting and Appraisal, said prices in various districts have repeatedly broken record highs in recent months, and new transaction prices may not be able to catch up, which will affect valuations of properties.

Prices are at historical highs and the market needs more time to get used to it before the trading volume goes up again.

Cheung believes there will be another wave of record prices in the future.

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October 2021

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