Hong Kong's inventory of unsold residential property rises to a decade-high of 10,000 homes as trade war, protests deterred buyers

By Lam Ka-sing and Sandy Li / SCMP | July 30, 2019 10:01 AM SGT
Hong Kong's inventory of unsold residential property rose to the highest in more than a decade, as uncertainties brought by the US-China trade war and the city's ongoing political unrest deterred buyers from big-ticket purchases.
The figure stood at 10,000 unsold homes at the end of the second quarter, 1,000 units more than the end of March, according to data by the Transport and Housing Bureau.
The expanding stock " fewer than Hong Kong's first-half home sales " underscores the proposal by Chief Executive Carrie Lam Cheng Yuet-ngor to tax developers to bring housing supply in line with demand and help rein in prices. It also adds fuel to forecasts of an imminent crest in home prices, as supply shows signs of outstripping demand.
"Developers still need to proactively sell completed new projects to avoid special rates," said Centaline Property Agency's senior associate research director Wong Leung-sing, referring to the vacancy tax. "The 10,000 completed unsold homes has just reached the warning level. Do not let the number rise."
The proposed duty, if and when it is passed by the city's legislature, will slap a retroactive duty of about 5 per cent of a property's value on the developer if the property remains unsold a year after its completion.
In response, developers have accelerated their sales pace to clear as much stock as possible before the proposed tax kicks in, said JLL's senior director of valuation advisory services Cliff Tse.
"Although it is yet to be passed by the [legislature], developers are expected to be more sensitive to the market sentiment in adjust the construction progress," said Tse, whose firm expects average prices to drop 5 per cent this year. "They might slow down the construction work of their new projects if market sentiment and outlook are not optimistic. Slowdown of construction could mitigate the burden of paying special rates if they forecast difficulties of selling new units."
The marketing and sales campaigns ran into headwinds in May and June, when the year-long US-China trade war went up a notch, while Hong Kong was rocked by an unprecedented level of public unrest and civic strife through incessant street protests.
Wang On Properties sold two units of 104 flats at its Maya by Nouvelle project in Yau Tong on May 25, the second consecutive weekend of flops, as an unexpected deterioration in US-China relations gave buyers cause for...