Hong Kong Property Home Owners Start to Cut Prices
After years of trying unsuccessfully to throw cold water on its overheated Hong Kong Property arket, Hong Kong’s efforts may be finally meeting with some success.
Faced with record-low transaction levels, sellers are starting to lower their asking prices, agents say, especially in the city’s New Territories region, which borders mainland China and is home to generally lower-priced apartments.
For months, the city’s housing market has stalled, as prices stayed stubbornly high and buyers sat on their cash.
Last month, says BNP Paribas Hong Kong Property nalyst Patrick Wong, sales of Hong Kong homes dropped to levels not seen since the city was struck by the severe acute respiratory syndrome (SARS) pandemic in 2003, when the city was seized with fear and some of its neighborhoods turned into virtual ghost towns.
Now, as sellers start to cut their prices, says Mr. Wong, volume has begun to pick up again.
“March was really bad on the secondary market,” he says. “It’s still at a low level, but we see some Hong Kong Property owners are willing to lower their asking prices, so in April we’re seeing some rebound in terms of volume.”
According to Centaline Hong Kong Property gency research head Wong Leung-sing, sellers in the New Territories have been cutting prices by about 5%. That’s in part because those areas have already seen greater price pressure, thanks to some 5,000 new units completed in the area in 2012. Out of about 13,600 new units slated for completion this year, 83% of them are located in the New Territories, further deepening pressure on secondary-market sellers, he says.
One real estate agent, Constance Wong, says that a recent deal she negotiated was in Sai Kung, a picturesque coastal section of the New Territories, for a Hong Kong Property hat the seller had first tried to unload for HK$25 million (US$3.2 million). In the end, it sold for HK$22 million (US$2.8 million), she said—at a 12% discount.
But so far, though, shoppers seeking price relief outside the New Territories are having a harder time of it, says Centaline’s Mr. Wong. “It’s a very rare case on Hong Kong island where they are cutting,” he says. “And even if they cut 2-5% from the peak [price], the peak is so high—it’s not that significant for buyers.”
In recent years, Hong Kong’s government has launched multiple rounds of cooling measures to try and bring prices down, including the creation of higher down-payment requirements and extra taxes on properties resold in a short period of time.
Last October, in an attempt to stave off mainland Chinese buyers who’ve helped push up Hong Kong Property rices in the city, the government levied a 15% tax on residential purchases by any non-locals. Still, prices stayed high—and even continued to creep up, rising by as much as 2% in January. Since 2008, prices have more than doubled.
Hong Kong is one of the least affordable Hong Kong Property arkets in the world, where buying a home costs the equivalent of 14 years of a worker’s salary.
Chief executive Leung Chun-ying, who took office last year, has talked extensively about the need to address the city’s affordability problem through a mix of demand-oriented measures, as well as increased supply. According to official figures, 15,800 units are expected to be completed next year in Hong Kong, a 17% increase over this year’s total.
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