In Hong Kong’s residential sector, developers continue to launch primary (i.e. new build) projects with sweeteners, while in the re-sales housing market, activity is slow when faced with competition from new homes and with owners standing firm on asking prices.
In July, demand for new mass residential units remained the key driver of Hong Kong’s residential market. With several new projects having launched in June, 7,792 homes were sold in July – an increase of 95.5 percent year-on-year. The uptick continued in early August, as evidenced at Le Riviera in Shau Kei Wan, which reportedly sold 21 of its first batch of 30 units on the first day of launch.
On the contrary, sentiment in the re-sales market was subdued due to the limited supply of small homes and sellers standing firm on prices. End-users and home upgraders turned their focus to new projects being launched with sweeteners, particularly in the New Territories. For example, Mont Vert I in Tai Po, launched by Cheung Kong (0001.HK), reportedly sold 140 of its second batch of 246 units on the first Saturday of August.
In the luxury residential market, several major transactions were recorded in July, including the sale of the third flat at Opus in Mid-Levels East for HK$430 million. Luxury residential prices recorded a marginal increase of 0.4 percent month-on-month, but the market remained inactive, due to the government’s various cooling measures and an uncertain external economy.
Leasing demand for luxury homes slightly improved towards the end of the second quarter, with expatriate families seeking homes prior to the start of the new school year. However, due to multinational companies’ tighter housing budgets and a shift to personal leases, there was no notable rental growth as what we saw in such peak seasons in previous years. In July, the average rental remained stable at HK$41 per sqft per month. Knight Frank expects them to remain stable over 2014 amid an uncertain external economy.
In the mass residential leasing market, as overseas students flooded in searching for accommodation, the market entered a traditional peak season. Strong demand, mainly from mainland students, drove rents up 5-10 percent at properties near campuses in Sha Tin, Fanling, Hung Hom and Sai Ying Pun. A three-bedroom, 650-sqft flat at Whampoa Estate in Hung Hom was reportedly leased for HK$18,000 per month or HK$40.7 per sq ft—a record high for the development.
Despite the rising supply of primary homes, mass home prices have held up recently due to sustained demand from local end-users and home upgraders.
Knight Frank forecasts mass home prices will remain stable or only fall slightly by less than 5 percent in 2014.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
