08:01
A glimpse inside Hong Kong’s notorious subdivided homes
A glimpse inside Hong Kong’s notorious subdivided homes
The high inventory of completed homes is also likely to push developers to cut prices and sacrifice some profit margin to maintain liquidity.
The combination of high interest rates and excess housing stock has created a scenario where developers are eager to generate liquidity by providing attractive discounts, according to UBS. The bank says it would take four years for buyers to absorb the current housing stock.
Its view echoes the prediction made by S&P Global Ratings on Wednesday. The ratings agency expects home prices in Hong Kong to fall by 5 per cent to 10 per cent next year, and warned that when the inventory of flats starts to build up it may put even more pressure on selling prices.
UBS expected the number of negative-equity cases in Hong Kong – where the value of a property falls below the outstanding balance of the mortgage – to continue to rise as home prices keep sliding.
Loss-making deals are becoming more common in the market.
For example, a 495 square-foot unit at Park YOHO Milano in Yuen Long recently sold for HK$5.3 million (US$679,000), which is HK$2.36 million lower than the HK$7.66 million the owner paid in August 2018, according to Centaline Property Agency.
Eligible overseas professionals are no longer required to pay stamp duty on property purchases, unless they fail to qualify as permanent residents.
Meanwhile, with the residential property market in decline, developers are “losing their appetite for land acquisitions,” JLL said in a report released today.
Four residential sites have been withdrawn from government tender since 2022, compared to just three between 2015 and 2021, the property consultancy said. Recently two such parcels, in Tung Chung and Tung Chung east station, which could yield 1,614 units, were withdrawn.
“We expect this trend will continue and more sites will be withdrawn from tender as the sales in primary market failed to improve after the government relaxed the cooling measures,” said JLL.
“If there is no significant development in the primary market, developers will continue to give the cold shoulder to the tender,” said Norry Lee, senior director of projects strategy and consultancy department at JLL in Hong Kong. “The prevailing market conditions could pose challenges in achieving the long-term private housing land supply target.”