Completion of new flats in Hong Kong plummets to four-year low as looming vacancy tax spooks developers

By Sandy Li / | April 30, 2019 4:15 PM SGT
The number of new flats built to completion in Hong Kong plunged by 88 per cent to just 1,000 in the first three months of the year, with agents attributing the decline in part to fears among developers over the impact of the government's planned vacancy tax.
It is the lowest number since the first quarter of 2015, and represents an enormous fall from 8,300 in the October to December period, according to figures released by the Transport and Housing Bureau on Friday.
"The vacancy tax may be one of the reasons for the fall in completion of new flats. Lower supply will help to boost home prices in short term," said Derek Chan, head of research at Ricacorp Properties.
He said seasonal factors such as the Lunar New Year holiday would also have affected the progress of construction.
???Cliff Tse, senior director of valuation advisory services at JLL, said: "There were only 1,000 private housing flats completed in the first quarter. This appears to be a general pattern to have lower supply in the first quarter every year but will catch up in the forthcoming quarters. "
Tse believe around 20,000 flats would be completed in 2019 as about 25,500 units commenced construction works in 2016.
"The new supply for this year is anticipated to be in line with that of last year."
Hong Kong's Chief Executive, Carrie Lam Cheng Yuet-ngor, proposed the vacancy tax last year in an attempt to curb runaway property prices by forcing developers to add more housing to the city's supply. Some had held on to finished units for more than a decade as they waited for the right moment to cash in.
Under the proposal, completed homes left unsold for more than six months after receiving an occupation permit are liable to a levy of 5 per cent of the property value. The tax is already being discussed by lawmakers in the Legislative Council and could come into effect as early as this year.
Hong Kong's home prices...