Back-to-school fever over for rentals

The rental and secondary property markets has turned sluggish as students went back to school. The red-hot rental market, fueled by the return of mainland students, has cooled down this month and further declines in both transaction volume and rent in October are expected, said Sammy Po...

Aiden He

Thursday, September 16, 2021

The rental and secondary property markets has turned sluggish as students went back to school. The red-hot rental market, fueled by the return of mainland students, has cooled down this month and further declines in both transaction volume and rent in October are expected, said Sammy Po Siu-ming, chief executive of Midland Realty's residential division.

Sales of first-hand properties have been performing well in the past month or so, with a large number of buyers and investors entering the market amid pent-up purchasing power.

It is expected that the focus of the real estate market will still be concentrated on new projects this month, and second-hand property trading will waver, Po said.

About 1,500 units from two new projects were sold in the past few weeks, many of which were sold out on the day they were launched.

In contrast, 35 large housing estates in Hong Kong recorded only about 68 transactions a week in the period, down by about 30 percent from 96 a week in July.

The number in July, however, had plunged 43.5 percent from the peak of 170 a week at the end of February.

Along with fewer transactions come rising prices.

The private domestic price index has gone up for seven consecutive months this year to 396.3 in July - even higher than the 388.2 in September 2019 -while the rental index dropped from 200.1 to 179.4 in the same period, data from the Rating and Valuation Department shows.

Coupled with a shortage of high-quality and inexpensive flats, buyers have to pay a high price to enter the market and, as a result, they tend to have a wait-and-see attitude, Po said.

Some prospective buyers who cannot catch up with the price increase change their minds and enter the rental market. Housing estates like Taikoo Shing in Quarry Bay and City One Shatin recorded three times more rentals than sales in August, and rentals in many of the 20 housing estates also increased by more than 40 percent compared with July, data collected by The Standard's sister paper Sing Tao Daily shows.

A 582-square-foot two-bedroom unit was put on the market for rent at HK$20,000 in July and was only take up after the figure was cut to HK$18,500, or HK$32 a sq ft, said Kenneth Chiu, an agent at Centaline Property Agency.

The tenant originally planned to buy a two-bedroom unit for HK$11 million to HK$11.5 million, but the price of the flat had been pushed up to HK$12 million, exceeding the budget, so they had to rent a place temporarily.

Rentals in the newly completed Grand Central in Kwun Tong were also popular in August, with 154 deals recorded, an increase of 41 percent over 112 in July. But the average rent per sq ft also fell 8.3 percent to HK$33 in August from a month ago, said Kevin Leong, market manager at Ricacorp Properties.

Grand Central is a rare new project in Kwun Tong, with convenient transportation and complete supporting infrastructure around it. Coupled with the general discounts of 7 to 8 percent provided by the owners, it has attracted people, including many professionals and civil servants, to be tenants, Leong said.

There are currently about 240 places available for rent in the project and the minimum rent is HK$16,500.

The rental peak season of summer vacation has passed, and the phenomenon of more rental deals than purchases in the property market has become less substantial. Even if the borders reopen in the future, the rental market will remain weak, Po said.