The volume of residential sales in Hong Kong fell 8% month on month in July after three months of growth in a row, the latest figures from the Land Registry show.
Overall property prices remained stable and this was due to sustainable end user demand, according to the analysis in the latest monthly report from international real estate firm Knight Frank.
It explains that the new build market, which contributed to about one third of total residential transactions in Hong Kong, is where major developers generated good sales in their recently launched projects.
For example, 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 square foot, up 19.2% from two years ago when the adjacent site was sold.
However, the report points out that 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 three to four 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,’ the report says.
‘We maintain our forecast of luxury home prices falling 5% to 10% this year and mass residential prices dropping up to 10% over the year,’ it adds.
The report also says that the Grade A office market in Hong Kong remained subdued in July as many large financial institutions continued to downsize which had a negative effect on leasing demand.
This means that medium sized firms are using it as an opportunity to take up space released by multinational corporations and Knight Frank expects this trend to continue.
By the end of the year Knight Frank expects central office rents to increase but in decentralised areas, such as Kowloon East, there is likely to be rental pressure due to increasing upcoming supply.
source: Property Wire