Cooling measures designed to ease Hong Kong’s runaway property market appear to be working as price increases in primary and secondary markets begins to slow. Developers are also offering enticing discounts to buyers that are helping to offset those cooling measures, according to the latest reports from Knight Frank. Analysts say they expect mass home prices to drop as much as 15% in 2014, while prices for luxury units may only come down as much as 10%. For more on this continue reading the following article from Property Wire.
Sales of new build homes dominated Hong Kong’s residential market during December, according to Knight Frank’s latest report on the region’s property market.
Developers continued to offer attractive benefits packages to buyers, many of which help to offset the impact of government’s cooling measures, the report says.
During the first quarter of 2014, the government plans to release 12 new residential sites, providing 5,500 flats, the largest number of sites and the highest estimate of production capacity since the launch of the quarterly land sale programme in 2011.
According to the government, new home supply from land sales in the financial year ending March 2014 will provide 13,700 flats.
Thomas Lam, director and head of research and consultancy for Greater China at Knight Frank, expects home prices will edge down in 2014. Prime residential prices are forecast to fall by between 5% and 10%, while in the wider market property values are forecast to fall between 10% to 15%.
With primary prices in certain districts now close to, or even lower than secondary prices in the same area, sales of secondary properties were further suppressed. For example, Sun Hung Kai Properties sold its entire first batch of 120 flats at Phase 2, Century Gateway in Tuen Mun within seven hours of launch.
Discounts and rebates of up to 11.5% were offered to boost sales and prices of the first batch were15% lower than those of secondary homes nearby, the report points out.
It also says that the leasing market was quiet in the traditional low season. Luxury residential rents dropped 6.2% over 2013 and could dip a further 5% to 10% in 2014, as supply increases with the sales sector continuing to be suppressed by various cooling measures.
The report also points out that none of the 12 residential sites to be released in the first quarter involves the MTR Corporation. Around 80% of the supply, providing an estimated 4,520 flats, will come from five sites in Kai Tak, Tai Po and Tin Shui Wai.
‘We believe it will be difficult for the government to achieve its annual target if no timeframe is set for MTR projects, which could offer as many as 6,000 flats,’ the report explains.
‘We expect mass home prices to drop 10% to 15% in 2014, with the increased supply and the continuing implementation of cooling measures. Luxury residential prices will be more resilient, dropping only 5% to 10% in 2014,’ it says.
‘The second half of the year will see the most notable price drops, as during the first half of the year, the market is expected to be supported by the release of previously accumulated purchasing power,’ it concludes.
This article was republished with permission from Property Wire.