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Hong Kong January home sales fell to 25-year low, Centaline says
[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 figures in January 1991. The previous monthly low was 3,786 units in November 2008 according to a Jan 31 release.
"The Hong Kong residential market is all about sentiment," said Joanne Lee, senior manager of the Hong Kong research and advisory team at Colliers International Group Inc.
"Falling stock-market prices, the economy weakening, China's economy weakening and increases in the interest rate will all have an impact," she said.
Hong Kong's property market has been showing signs of weakening since reaching a peak in September 2015, 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 could fall another 20 per cent in 2016, according to some estimates.
The tepid demand was particularly 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.
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.
"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."