Residential sales remain sluggish as Hong Kong homebuyers 'stay on the sidelines' to wait out anti-government protest crisis

By Cheryl Arcibalcheryl.arcibal@scmp.com / https://www.scmp.com/news/hong-kong/article/3039074/residential-sales-remain-sluggish-hong-kong-homebuyers-stay?utm_medium=partner&utm_campaign=contentexchange&utm_source=EdgeProp | November 26, 2019 11:57 AM SGT
Hong Kong homebuyers remain wary of the housing market as underperforming residential sales show the damage inflicted by months of citywide protests.
CK Asset Holdings, the city's second-largest developer, on Saturday sold only six out of 180 available flats at its Seaside Sonata project in Cheung Sha Wan.
The poor sales as of 6pm were evidence of the grim sentiment of homebuyers as the worst political crisis in Hong Kong's history continues to roil the city.
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The sluggish residential sales have become a trend despite the government's initiatives to relax mortgage lending rules for first-time buyers.
"Buyers are staying on the sidelines," said Sammy Po Siu-ming, chief executive of Midland Realty's residential division. "They would like to wait until the social movement is over."
By late October, the Seaside Sonata project had sold 65 out of 149 units in the protest-hit district of Sham Shui Po. Previous transactions in the development had a selling price of between HK$7.14 million (US$826,000) and HK$16.9 million.
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The weak demand for new homes on Saturday came after a week that posted the worst performance of Hong Kong residential property since the anti-government protest crisis erupted in June.
By November 17, only four out of 144 units at Chinachem Group's Sol City development in Yuen Long had been sold, according to agents. That day, less than 10 potential buyers were at the sales office at Nina Tower in Tsuen Wan when sales commenced at 10am.
In October, Chief Executive Carrie Lam Cheng Yuet-ngor raised the mortgage cap to 90 per cent, from 60 per cent, for homes valued up to HK$8 million, and to 80 per cent, from 50 per cent, for homes valued up to HK$10 million. The measure was meant to give first-time homebuyers an advantage and help ease the city's housing crisis.
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Despite the recent dismal sales, the Knight Frank property consultancy said the relaxation of the mortgage cap helped bring buyers back to the housing market. The company said in its latest report that Hong Kong's overall sales volume grew 16.1 per cent to 4,001 units in October, reversing two consecutive months of declines.
Knight Frank said first-time buyers could now afford to purchase small- to medium-sized units instead of nano flats, the term for flats measuring less than 200 sq ft.
"Developers offered flexible payment plans and discounts for both new home projects and unsold stocks, which spurred homebuyers to speed up purchases in the primary market," the company report said. It cited the 375 units in The Grand Marine in Tsing Yi and the 167 units of Emerald Bay in Tuen Mun " all of which were sold.
Knight Frank said other factors would also boost transactions in the residential market, including the implementation of the vacancy tax " which seeks to punish developers for hoarding newly completed flats amid soaring prices " and a likely cut in interest rates.
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 © 2019 South China Morning Post Publishers Ltd. All rights reserved.
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