HK Property Market Watch — July
Read less. Know more. July in two minutes:
Carrie Lam proposes new plans for the upcoming year
- Aim to increase land supply to curb property prices
- Impose a vacancy tax on developers where apartments left vacant for more than 6 months will be charged 200% of rental value, or 5% of unit’s price
- Plan to reduce the cost of public housing — homes subsidized under HOS will have a price cut, from 30% to 50% below private flats
- No plan to relax current mortgage restrictions
Property market still hitting highs
- Property sales in HK touched HK$ 403.7bil. for the first half of 2018
- Price of lived-in homes rises for the 26th straight month
- Single parking space sells for HK$ 6mil. in Ho Man Tin. Average parking space sells for HK$ 2.25mil. — 6x increase since 2006, while home prices have increased 3.4x since 2006
- Chinese company sets a new record of HK$ 5.93 bil. for the largest single residential transaction
- Pansy Ho purchases Peak mansion for HK$ 900mil.
Company Shares Transfer loophole has cost the government
- The Stamp Duty loophole where you can purchase a property owned by a company for negligible stamp duty has cost HK$ 9.4 billion
- About 60% of cases involved non-local buyers, mostly mainland Chinese
- Value of housing acquired through companies transfer totaled HK$ 26.6 bil. in 19-month period, equal to 5% of total sales in secondary residential market.
Analysts expect the market to cool
- Citibank analysts expect residential home prices to drop 7 per cent in the July to December period. (Although, Citibank has gotten it wrong on several occasions in the past)
- Prudential brokerage cautioned a small adjustment (~ 5%) in the market
- JLL consultants warn cooling measures may cause market ‘free fall’
Some developers are taking precautions
- Several developers are cutting prices for the first time in three years
- Sun Hung Kai increased offering of St. Martin from originally planned 128 units to 168 units
- SHK cuts prices of one of its latest projects, two large property investors are selling many of their residential and commercial holdings
However, many developers are still seeing red-hot demand
- More than 1,000 prospective buyers registered their interest to buy 168 units at St. Martin (Tai Po). 165 were sold.
- 300 people submitted bids for 45 units at Victoria Harbour (North Point), 44 sold within hours.
- Large number of applicants were property investors (Centaline reporting 70%, Midland reporting 50%)
- After initial success, SHK rose the average price of North Point project by 10% and still received strong demand
- SHK applying to double the size of HK residential project
- New World Development raised prices by as much as 23% for the last six units at The Pavilia Bay (Tsuen Wan)
With the vacancy tax, developers may change strategies
- Analyst expects more developers will opt for leasing to bypass the vacancy tax. “These apartments could sell for much higher prices if they hold onto them.”
Add that there will be an influx of mainland Chinese professionals
- Around 21,000 professionals from mainland China could become permanent Hong Kong residents by 2019, and benefit from the lower stamp duty rate
There are mixed signals in the market. The market has shown some signs of cooling. However, with strong demand from buyers and restrictive mortgage regulation already in place, it will take some time to see any significant shifts in sentiment.
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