_Hong Kong: 93,000 flats to be provided in coming 3-4 years

The volume of residential sales in Hong Kong fell 8% month-on-month in July to settle at 4,243 units, according to the Land Registry. This follows three consecutive months of growth. Property prices remained stable thanks to sustainable end-user demand.

August 22, 2016

The new-build market, which contributed to about one third of total residential transactions, is where major developers generated good sales in their recently launched projects. For instance, Park Yoho Venezia in Yuen Long has sold 95% of its 62 units in its third batch of sales in July and The Ascent in Cheung Sha Wan was oversubscribed seven times and sold over 94% of its first batch of 125 units in one day.

There have been some transactions in the otherwise muted land market. In one notable sale, a domestic site in Pak Shek Kok, Tai Po was sold at an accommodation value of HK$3,932 per sq ft, up 19.2% from two years ago when the adjacent site was sold.

Despite the recent pickup in sales, the surge in upcoming supply is expected to suppress growth in home prices. According to the latest data from the Transport and Housing Bureau, 93,000 new homes are to be provided in the coming 3-4 years.

Developers are expected to continue offering deep discounts and competitive mortgage schemes to attract buyers in order to offload inventory before a possible US interest-rate hike in the coming months. We maintain our forecast of luxury home prices falling 5-10% this year and mass residential prices dropping up to 10% over the year.