Hong Kong developers cut housing project prices as outlook dims

HONG Kong developers CK Asset Holdings and Sun Hung Kai Properties are lowering prices for their new residential project at a time when further interest-rate hikes weigh on the housing market.

Updated price lists from Wednesday (Apr 12) showed that the companies are offering discounts of more than 10 per cent for some units in the residential complex Grand Jete. CK Asset and Sun Hung Kai did not immediately respond to requests for comment.

Prices in Hong Kong could decline over the rest of the year, according to a Bloomberg Intelligence note. That would reverse a nascent recovery in Hong Kong’s property market, which saw its worst slump in more than a decade last year.

The Hong Kong Monetary Authority’s recent intervention to boost the local currency could prompt further interest-rate increases, dampening a home-price recovery of more than 7 per cent since the beginning of the year.

“More developers could offer discounts on their mass-market projects to boost sales due to ample new home supply in the pipeline,” Bloomberg Intelligence analyst Patrick Wong said. He added that he expects home prices to drop about 5 per cent if mortgage rates hit 4 per cent later this year.

The current mortgage rate is about 3.44 per cent, according to an index from mReferral Mortgage Brokerage Services.

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Other analysts also anticipate headwinds. In March, S&P Global Ratings forecast that prices may only rise slightly or remain unchanged for the rest of the year due to high inventory and a potential supply spike next year. BLOOMBERG