Going viral recently on the popular local social media platform LIHKG was a letter purportedly drafted by a group of Villa Garda Phase I and II buyers appealing to the developer for help after many of them were said to have had difficulty getting mortgage loans after banks drastically cut back property valuation.

Villa Garda is a development led by Sino Group in the Lohas Park district of Tseung Kwan O. The first and second phase were sold in 2022, while Villa Garda III was launched last summer.

It is not immediately known how many buyers signed the letter or whether it has actually been sent to the developer. If it has been passed on, how will the developer respond to the appeal?

That said, the plight of undervaluation by lenders cannot be exclusive to the Villa Garda home buyers as it is believed that many of those buying off-plan and opting to wait to pay the full amount until after the buildings were completed would face a similar difficult situation as correction continues in the local property market.

Except for those with truly deep pockets, many purchasers who had normally paid 10 percent in down-payment would have to cough up an additional chunk of cash to meet the gap to complete the deal.

The timing could not have been worse as new, recent sales of projects in-situ or nearby were often priced 20 or even 30 percent off the prices when the developments were first launched for sale two or three years ago.

The LIHKG post drew a slew of comments, mostly ridiculing the buyers pleading for mercy.

The ridicule may be unwarranted.

While emphasizing there should be no mercy for speculators, some sympathy does go to the genuine home buyers, many of whom committed their life savings to secure a small space that they thought they could be proud to call home.

It is also thought that many of the buyers back then were genuine users since years of property-cooling measures were believed to have eliminated speculators from the property market.

The genuine homebuyers are facing a double whammy.

As banks cut back valuation and move to tighten lending, developers can also legally go after defaulting buyers for the price difference after forfeiting the down payment if the affected units were to be sold for an amount less than the original price.

A warning recently by a senior CK Asset executive was a reminder of this stark truth.

As CK Asset's chief manager of sales William Kwok Tze-wai launched the Hung Shui Kiu project Lyos, he threatened to take action against defaulting buyers to recover the price differences.

A developer would normally avoid making such an unpopular statement as it could have a negative impact on upcoming sales.

That Kwok chose to make the threat may reflect a concern that, as the time has come for homebuyers to complete their earlier deals, more buyers may be forced to default due to difficulties in securing mortgage loans.

The plight facing the Villa Garda I and II homebuyers could be just the tip of the iceberg.

Yesterday there were reports of a few more incidents of defaults.

Homebuyers' plight tip of iceberg?