With interest rates still at a 23-year high in Hong Kong, the forecast for sales remains downbeat, according to Ricacorp Properties.
“Clearly, owner-occupiers are experiencing dwindling confidence in the market,” JLL said in the report. “Factors such as job security and wage growth, which were once stable and reliable, have now become significant concerns.”
In May, the average price of a new class A unit, defined as a flat with a size of less than 431 sq ft, in Yau Ma Tei was HK$20,346 (US$2,605) per square foot, a 10.6 per cent decrease from HK$22,768 in 2015. Meanwhile, in Kennedy Town, average per-square-foot prices were down 6 per cent to HK$22,022 from HK$23,424 in 2015.
Yet Henderson Land’s The Haddon in Hung Hom, for example, only sold a fifth of the 63 units it put on offer on the first day of sales last month. Also late last month, not one of 30 units put on sale at Continental’s Amber Place in Cheung Sha Wan sold during the launch weekend.
Meanwhile, secondary home prices are also suffering, with the official price index from the Rating and Valuation Department reverting to a declining trend in May after registering a small increase in April.
It fell 1.22 per cent in May, reversing a 0.5 per cent improvement in April, and the May index reading of 305.9 is comparable to that of November 2016 at 306.7, JLL said.
Following a decline of more than a quarter in May, transactions of private residential units sank by 36 per cent in June to 4,165, compared with the previous month, according to data from Midland Realty.
The total number of property transactions – encompassing everything from homes and car parks to shops, industrial units and offices – fell 33 per cent to 4,939 as of June 27, from 7,361 in May.
The latest official data on property sales is likely to come out this week.
“It is estimated that residential transaction volume in the second half of the year will shrink by about 20 per cent compared with the first half,” said Derek Chan, head of research at Ricacorp. “As for developers, they will still use a low-price strategy to sell their stock, so property prices may also fall by another 3 per cent in the second half of the year.”
JLL added that more “supportive demand-side policies” were needed to restore demand-supply balance and cushion the downward spiral of home prices.
