Hong Kong Homebuyers Warned Not to Get Carried Away By Surge in Sales
Hong Kong’s property market may be on an upswing, but market observers warned that homebuyers shouldn’t throw caution to the wind.
Potential buyers should remain prudent when assessing the local housing market as the outcome of the ongoing U.S.-China trade negotiations remains uncertain, said Joseph Tsang, managing director of real estate services firm JLL in Hong Kong, who echoed a similar warning on Monday by the chief of the region’s de-facto central bank.
The warnings came in response to a surge in property sales over the weekend that resulted in the city’s real estate market having its best day for new home sales in two and a half years on Saturday. Developers sold nearly 1,100 new units on that day, Caixin has learned from industry data providers.
Over the weekend, developer Wheelock Properties Ltd. sold all 500 new units in its Montara residential project. More than 18,000 applicants competed for an apartment in the development, making it the fourth most popular new residential project in Hong Kong’s history. The last time that a new housing development received that many applications was in August 2017. The two most popular projects since records began hit the market in 1997, the year before the Asian financial crisis.
In an interview this week, Tsang told Caixin that the recent rebound in Hong Kong’s property market came as local buyers regained their confidence in the economy, thanks in part to the positive outlook for the U.S.-China trade talks since the Lunar New Year in early February. Lower prices compared with last year have also driven deal-making.
Still, Tsang advised caution because Hong Kong’s economic prospects are largely influenced by international trade — especially between the world’s two biggest economies, he said. Any setback in the trade negotiations would take a toll on the region’s economy.
The negotiations had appeared to be progressing smoothly until this weekend, when U.S. President Donald Trump took to Twitter to criticize the trade talks with China for moving “too slowly,” and threatened to subject another $325 billion worth of products to additional tariffs, rattling stock markets in the U.S. and China.
Tsang’s warning followed a similar call for caution by Norman Chan, chief executive of the Hong Kong Monetary Authority. In a Legislative Committee meeting on Monday, Chan suggested that local residents need to carefully examine their capability to repay their debts, as the current low mortgage rates are subject to change.
After a tumble from a recent peak in August, Hong Kong’s property market has been on an upswing in recent months. The average price for a private residence in the city has been rising since January, with the latest report by the Hong Kong Rating and Valuation Department suggesting that the average price jumped 5.04% from December to March.
Besides rising prices, trading volume in the market has also surged. Hong Kong’s Land Registry recorded 7,822 completed deals in April worth HK$70.1 billion ($8.93 billion). Those respective figures are nearly triple and double those recorded for December.
Hong Kong again tops the list of the world’s most expensive housing markets, according to a ranking created earlier this year by U.S. real estate firm CBRE Group Inc. In Hong Kong, the average home carries a price tag of $1.24 million.
Contact reporter Isabelle Li (firstname.lastname@example.org)
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