- No change in currency and lending rates. Other indicators suggest poor market sentiment.
- Property transaction volumes and value continue to decline
- Continuing poor sales in first-hand residential market
- Auctioneers are having trouble selling foreclosed homes
- Commercial property de-Centralization continues
- No plans yet for government to limit the market decline
Currency and lending rates and other statistics
There has been no change in key market indicators in the last month.
The HKMA has reported that in September, mortgage applications had the largest month-on-month drop in 20 years. Midland Realty has begun laying off and requesting their lowest performing staff to take unpaid leave.
According to the Centa-City Leading Index, secondary homes have fallen for 8 weeks, the longest streak since 2016.
Property transaction volumes and value continue to decline
[Overall] Transaction volume of all properties have declined in the last few months, and continued to decline in November. We saw a slight bump in October due to incentives by property developers in the first-hand market. But that did little to quell the overall market sentiment. Accordingly, total value of all property transactions also fell.
[Breakdown] The primary residential and industrial markets have taken the biggest hits in the past few months. The secondary residential market has remained relatively consistent for the last 2–3 months. Conversely, the office market received a boost in November, doing better than it did from July to October.
[Regions] According to the Centa-City Index, all regions have dropped in prices in the secondary private residential market. NT East and Hong Kong Island have both dropped the most, falling by 4.59% and 2.16% respectively.
- New Territories East (-4.59%)
- Hong Kong Island (-2.16%)
- New Territories West (-1.27%)
- Kowloon (-0.18%)
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Continuing poor sales for first-hand residential market
[Overall discounts] Developers are offering up to 10–16% discounts on new properties in the market. However, in some cases, less than 5% of the units being offered are actually purchased. Just a few months ago, these units were being oversubscribed to.
[Developer incentives] Wheelock Properties announced a deferred payment plan with steep discounts in 5 developments, from Nov 17th effective to the end of the year. This is similar to Kerry Properties’ promotion in September, allowing buyers to complete the purchase transaction in two years time. CK Asset Holdings offered a 12-year payment plan combined with up to 24% discounts at The Zumurud.
Hong Kong’s cheapest apartments since 2014 went on sale in Yuen Long. The government is proposing more public housing projects, which is having a major impact on private developers in neighboring regions. These developers are offering large discounts, but are still significantly higher than the price estimates of new public developments.
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Auctioneers are having trouble selling foreclosed homes
Lenders are repossessing property more quickly now, after 4–5 months of missed mortgage payments instead of 9 months.
Auctions continue to receive a high turnout but are drawing few to no bids at all. Buyers are taking a wait-and-see approach to the market.
Commercial property de-centralization continues
Several entities are moving their headquarters from the Central Business District to areas in Island East, particularly Quarry Bay and Tai Koo.
HK SFC will move their 800+ person unit from Cheung Kong Centre (HK$ 170/sqft) in Central to One Island East (HK$ 55/sqft) in Taikoo. While increasing their overall floor area, this move will still save them over 50% of their monthly rent.
On the investment front, Gaw Capital plans to expand their office portfolio and has purchased a 49% stake in Swire’s Citiplaza in Quarry Bay.
No plans yet for government to limit the market decline
Hong Kong housing chief Frank Chan says that property cooling measures will stay in place for now. The government has taken several measures in the last few years to cool the property market — Buyer’s Stamp Duty, Special Stamp Duty and the high Loan-to-Value ratio, which caps the loan received to 50%-60%.
It seems unlikely that the market will hit a downward spiral. These extremely restrictive policies give the government plenty of room to limit the decline in the market.