Hong Kong developers are likely to roll out incentives to lure buyers after a dismal year that saw home sales – both new and second-hand – plunge to a record low, according to CBRE.
With unsold stock of between 16,000 and 18,000 units currently, and new supply in the pipeline, about 45,000 new flats are likely to become available this year, the property consultancy said in its latest report. That is about four times more flats than were sold in the whole of last year.
“After record-low primary residential transactions of 10,315 units in 2022, we believe developers will be under pressure to push their units for sale this year,” CBRE said. “To attract property buyers, we anticipate developers will adopt a more aggressive approach by rolling out various incentives strategically, including progressive payment mortgages and attractive mortgage plans.” One approach developers may use is keeping prices the same but offering sweeteners such as agency fee rebates, CBRE said.
The first weekend property sale of the year saw Henderson Land offering 108 units in the third phase of its One Innovale development in Fanling, New Territories. Units were priced at an average of about HK$14,560 (US$1,861) per square foot, ‘after discounts’, slightly lower than the HK$14,618 average price when the project launched in August.
Still, Hong Kong’s residential property market may be ‘in the middle of a turning point’, with the reopening of borders with mainland China and the rest of the world boosting optimism among both homebuyers and sellers, CBRE added.
“With the reopening of the Hong Kong-mainland China border, Hong Kong’s economy is likely to turn around after contracting in 2022, together with a possible uplift in employment this year,” CBRE said. “Coupled with the anticipation of milder rate hikes, and therefore a more stabilised interest rate, we [foresee] a reversal in market sentiment. Residential buyers will turn more bullish, while sellers are unlikely to dispose of their units at a price cut.”
In the first 11 months of 2022, lived-in home prices fell by 13.8 per cent. From a peak of 398.1 in September 2021, the lived-in home price index data compiled by the Rating and Valuation Department is down by 14.75 per cent. Only about 9,000 new homes were sold last year, according to Midland Realty, about half the typical 16,000 to 17,000 units sold in a year. But 2023 is off to a reasonable start and looks promising for developers, according to Buggle Lau Kai-fai, Chief Analyst at Midland Realty.
“In the first 17 days of the year there have already been 294 new residential units sold, and the value is about 20 per cent higher at HK$4.7 billion (US$600 million) in January from HK$3.9 billion in December,” said Lau. “Last year was bad for home transactions so if developers wanted to cut prices, they would have already done so. I think they’re just waiting for the right time to release their stock.” New home sales this year are likely to rebound from a nine-year low of around 10,000 in 2022 and return to about 18,000 units, according to Centaline Property Agency.
