Analysts and agents believe sales volumes and prices may continue to rise in coming weeks if no additional cooling measures are announced by Chief Executive Donald Tsang Yam-kuen in his annual policy address next Wednesday, Oct 13.
Comparisons with demand during last year's "golden week" holiday weekend were not meaningful, agents said, because there were few new projects released then due to poor market sentiment.
"Buying demand dried up after Cheung Kong sold all 1,688 units in its Le Prestige project in Tseung Kwan O in late August last year. As a result most developers held back on the marketing of new projects until late October," Patrick Chow, head of research at Ricacorp Properties, said.
According to the Land Registry there were only 659 registered transactions in the primary market in November last year, which reflected the low level of activity in October.
Chow said that in contrast to the strong demand evident in the primary market, secondary market sales had become sluggish since the government introduced several cooling measures on Aug 13. The measures included requiring borrowers to make bigger down payments on luxury flats.
The sustained demand for new homes despite the government's anti-speculation measures has triggered concerns it will take more steps to dampen demand.
"[The buoyant sales are] a strong statement that buyers have changed their wait-and-see attitudes. They have decided to enter the market after seeing prices continue to grow," Paul Louie, an analyst at brokerage house Nomura International, said.
On August 13, banks lowered the maximum loan amount they were willing to make on flats that cost more than HK$12 million from 70% of the property value to 60%. Despite the move, overall home prices edged 2% higher between August 16 to September 26, the Centa-City Leading Index, which tracks house prices, shows.
Buyers also disregarded the government's statement that it would increase land supply, and a ban on the resale of new flats before the project's completion (so-called confirmor sales). In the four days to Sunday, developers sold nearly 1,400 homes. Cheung Kong sold all 1,143 units at Oceanaire in Ma On Shan for HK$7.6 billion; Sun Hung Kai Properties raised more than HK$4 billion from the sale of 130 luxury houses at The Valais, in Sheung Shui; and Chinachem Group earned HK$1.2 billion from the sale of 160 units at Billionaire Royale in Kowloon City.
Transaction volumes in the secondary market in Ma On Shan and Sheung Shui — where the two major new projects are located — were particularly quiet as buyers turned to the primary market, agents said.
"After the sale of new projects comes to an end, home seekers will turn to the secondary market. So we expect the secondary market to become active again this Saturday," Helen Yuen, sales manager at Centaline Property Agency's Ma On Shan branch, said.
Eric Yuen, head of research at brokerage house GuocoCapital, said the strong sales at the weekend indicated sentiment among both investors and end-users remained positive.
"The wealth effect created by the recent stock market rally will help boost property sales," he said. The Hang Seng Index rose 11% in the third quarter, as corporate earnings and economic reports boosted confidence that the global recovery will not falter.
Alfred Cheung, senior sales director for the New Territories and Eastern districts at Centaline Property Agency, said owners would be more aggressive in raising their asking prices as a result of the strong sales at The Valais. — South China Morning Post
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