SINGAPORE (EDGEPROP) - Hongkongers are expected to spend HK$170 billion (US$21.9 billion or $29.35 billion) on new homes this year, the lowest since 2015, according to Centaline Property Agency.
As a fourth wave of coronavirus cases adds to the woes of a property sector already hit hard by economic recession and rising unemployment, analysts expect a bumpy ride next year too.
"The sharp fall in sales is largely due to the poor market sentiment in the first half. Developers faced immense challenges to catch up the sales in the second half," said Wong Leung-sing, senior associate director of research at Centaline.
Developers pulled in about HK$145 billion from January to November, said Centaline.
In 2015, the total transaction value amounted to HK$167.14 billion.
With just a month left to the end of the year, Centaline expects the number of new home sales for the whole of 2020 to be down 27 per cent to 15,000, the lowest for seven years. In 2013, there were 9,753 transactions for new homes.
As developers offer their new projects at more attractive prices, home seekers have recently been flocking to the primary market.
Ricacorp Properties said the strong sales of new project launches are partly down to the slightly poorer performance of the secondary market.
Prices of lived-in flats dropped 0.6 per cent in October, according to figures released by the Rating and Valuation Department on Thursday.
"Flat viewing appointments declined by 4 per cent at the weekend [from a week ago] as owners were reluctant to offer discounts to compete with developers," said Derek Chan, head of research at Ricacorp Property.
Chan said owners also preferred not to open their flats for public viewing amid the fourth wave of Covid-19 currently plaguing the city.
Hong Kong recorded 115 new coronavirus cases on Sunday, the highest daily increase since the latest wave of infections started more than a week ago, and the first time the city has seen a three-figure rise since the 125 cases on August 1.
Sales of new homes started to make a comeback when New World Development launched the first phase of Pavilia Farm in Tai Wai last month, pricing the units at 16 per cent lower than a nearby new project, The Garrison.
Fuelled by the low starting prices of Pavilia Farm and other projects, sales of new homes surged 110 per cent to 1,833 transactions worth HK$19.6 billion between November 1 and 25, according to Centaline. Pavilia Farm accounted for 40 per cent of those.
The Pavilia Farm attracted as many as 22,000 registered buyers, allowing the builder to increase prices by about 14 per cent in the subsequent batch of units to go on sale.
By Thursday, New World Development had sold more than 2,100 units for more than HK$23 billion in phases one and two since the development's launch last month, according to market sources.
Minmetals Land, the property subsidiary of one of China's largest metallurgical producers, sold nearly all of the first 279 units on offer at its Montego Bay project in Yau Tong on Saturday, with as many as 17 buyers bidding for every available flat, agents said.
At Nam Cheong, Sun Hung Kai Properties (SHKP) found buyers for 52 of the 78 leftover apartments at its Cullinan West III project, agents said. On Friday, Henderson Land Development sold 65 of the first batch of 68 flats at its Arbour project in Tsim Sha Tsui.
"New home sales in November will be reflected in Land Registry data next month and in January 2021. Buying sentiment will improve in the coming months," said Wong.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.