[HONG KONG] Hong Kong home sales slumped to the lowest in at least a quarter-century last month, Centaline Property Agency Ltd estimated, adding to evidence that prices have further to fall.
Centaline estimated January sales of new and secondary homes would reach 3,000 units, the lowest monthly figure since it started tracking data in January 1991. The previous low was 3,786 units in November 2008, according to a Jan. 31 release.
"The Hong Kong residential market is all about sentiment," Joanne Lee, senior manager of the Hong Kong research and advisory team at Colliers International Group Inc, said.
"Falling stock-market prices, the economy weakening, China's economy weakening and increases in the interest rate will all have an impact." Hong Kong's property market has been showing signs of weakening since reaching a peak in September, amid a rising supply of homes and slowing growth in China.
Housing prices are down 9.5 per cent from September, according to the Centaline Property Centa-City Leading Index and may fall another 20 per cent in 2016, according to some estimates.
The tepid demand was pronounced in January as buyers traditionally delay making purchases in the lead-up to the Chinese Lunar New Year holiday which begins on Feb 8. In turn, many developers have delayed the launch of new projects until then. Sales in December were 5,294 units.
The drop was particularly sharp in the primary market, with an estimated 420 new units sold last month, down 80 per cent from December's 2,127 units, Centaline said.
In order to encourage buyers, developers have been offering discounts and stamp duty rebates as well as second mortgages allowing borrowers to finance up to 90 per cent of a home's value.
Henderson Land Development Co's Harbour Park mass-market development in the Sham Shui Po district of Kowloon sold 15 units during January with discounts and rebates of up to 11 per cent, out of a 60 units released so far, according to the company website. Prices before discounts ranged from HK$3.47 million (S$635,000) for a 202 square-foot flat to HK$4.86 million for 276 square feet.
"If developers want to sell, especially for projects in the New Territories, they have to provide incentives to potential buyers," said Thomas Lam, senior director of valuation and consultancy at Knight Frank LLP.
"If they want to launch a new project they will have to offer more incentives than 12 months ago."