New Hong Kong property projects fail to dazzle as buyers turn to secondary market amid downbeat sentiment

By Lam Ka-sing / | October 29, 2019 12:24 PM SGT
New property projects launched on Friday failed to take off, as a relaxation of mortgage restrictions diverts homebuyers to Hong Kong's secondary property market.
In a dismal showing, by 6.45pm CK Asset Holdings had sold 65 out of 149 units on offer at its Seaside Sonata development in the protest-hit district of Sham Shui Po. Mainland Chinese developers Longfor Group and KWG Group had sold only eight out of 108 units at their Upper Riverbank development, while Great Eagle Holdings had sold 13 out of 46 units.
The secondary market has, on the other hand, witnessed a spike in turnover. For instance, 118 transactions were recorded in Tseung Kwan O, after Hong Kong leader Carrie Lam Cheng Yuet-ngor announced the relaxation in mortgage lending during her Policy Address on October 16. Only 52 transactions were reported in the first half of the month, according to Hong Kong Property (Services).
"The surprise rise in the loan-to-value ceiling to 80 per cent and 90 per cent for homes worth up to HK$10 million [US$1.3 million] and HK$8 million, respectively, may fuel short-term demand for secondary premises in these particular price brackets," said Keith Chang, senior director of realty investment at Savills.
But this is not translating into sales at new developments. Vincent Cheung, managing director of Vincorn Consulting and Appraisal, said homebuyers were turning to the secondary market thanks to its more flexible mortgage requirements, as opposed to the financing plans offered by developers.
Hong Kong has been rocked by five months of anti-government protests, and Cheung said this situation could persist for at least nine to 12 months.
"The recent social unrest is so acute. So first of all, can people come out to buy homes? Even for registering interest, you need to go in person," he added. "Do you want to buy immediately, when negative market sentiment prevails?
The Hong Kong government is also working with the Hong Kong Mortgage Corporation to provide an extra 30 per cent of loans to help first-time homebuyers secure financing through the mortgage insurance programme.