Hong Kong’s homebuyers turned out for the latest weekend launch of new residential property, as the developer’s discounts assuaged concerns that interest rates could remain high for a longer period.
Wheelock Properties sold 111 flats, or two-thirds of the 168 units on offer at its Park Seasons project at the Lohas Park in Tseung Kwan O as of 3pm, according to sales agents.
The sale comprised one-bedroom and two-bedroom flats measuring between 322 and 496 square feet (46 square meters), priced at between HK$4.54 million and up to HK$7.70 million (US$983,200), or HK$14,632 per square foot on average after discounts.
About 4,000 people had put down deposits to bid for the flats, or about 24 buyers for every available unit. The buoyant response underscored how Hong Kong’s property buyers had adapted to the high interest-rate environment, said Louis Chan Wing-kit, CEO of the residential division at Centaline Property Agency.
“Even if the US Federal Reserve does not cut interest rates, as long as developers maintain attractive prices, transactions should remain strong in May and June,” he said.
Hong Kong’s de facto central bank has been conducting its monetary policy in lockstep with the Fed to preserve the city’s currency peg to the US dollar, in place since 1983. The peg means that Hong Kong must keep rates high if the Fed maintains a high cost of funding.
That prospect may stretch into September, from the earlier expectation of a cut in June, after Fed Chairman Jerome Powell struck a hawkish tone this week on US inflation, saying that it could take “longer than expected” to get inflation back on target.
Some analysts have expressed concern that buyers may hesitate to purchase homes should the rate cut not materialise this year. Local and price-sensitive homebuyers could be the most impacted.
That did not deter homebuyers at Lohas Park. The project was jointly developed by Wheelock and Hong Kong’s subway operator MTR Corporation. The project’s 1,985 flats come in three phases, named 12A to 12C. Park Seasons (12B), on sale this weekend, comprises 685 flats.
The developer has already sold 570 flats in the first phase of its Lohas Park project, or 88 per cent of Seasons Place since launching it a month ago. That translated into about HK$3.64 billion of sales revenue.
The local government anticipated the high-rate environment, and preemptively removed some decade-long purchasing curbs to stimulate demand, especially from buyers with genuine need to own, Chan said.
The removal of curbs on March 1 rekindled property deals this year, after two of the worst years for transactions since 1996. As many as 18,000 new homes may find buyers this year, according to a forecast by Midland Realty, 28 per cent more than the previous estimate of 14,000 flats.