Hong Kong home sales fall 35% to lowest since April

HONG KONG: The value of Hong Kong home sales in October fell 35% to the lowest since April as potential buyers became concerned prices have risen too fast and a bubble may be forming.

Home sales fell to HK$36.3 billion (RM16.13 billion) last month from HK$56.2 billion in September, the Land Registry said on Nov 3 on its website. By volume, the number of residential units changing hands declined to 9,300 from 12,285, it said.

Hong Kong has been seeking to rein in home prices, which rose 28% from the start of the year through late October. The government has raised down payments for luxury apartments, suspended mortgage insurance for rental properties and said it may intervene if the market becomes “unhealthy”.

The drop in transactions in October “shows people really think that prices have surged too fast”, said Wong Leung-sing, associate director at Centaline Property Agency Ltd. “Transactions had begun to slow down even before the government intervened last month.”

Home sales last weekend dropped 30% from the previous weekend as buyers bet prices will fall after the government stepped up market-cooling measures, Centaline said in a report on Nov 2.

Wong said on Nov 3 home transactions may fall another 10% this month.

Hong Kong Financial Secretary John Tsang told developers at a closed-door meeting on Oct 27 that the government doesn’t rule out intervening in the property market should it become “unfair”, a person familiar with the matter said.

Two days later, Tsang told legislators he was “concerned” about “recent sales tactics and transacted prices” in the primary home market.

“Any impact the intervention creates on the market will be short term and only on a psychological level,” said Xavier Wong, head of Greater China research at property consultant Knight Frank. Fundamental factors such as interest rates and the number of newlyweds looking for housing haven’t changed much, he said.

Henderson Land Development Co, controlled by Hong Kong billionaire Lee Shau-kee, said last month it sold a duplex apartment for what it claimed was an Asian record of HK$71,280 per sq ft.

The Centa-City Leading Index, a weekly measure of home prices including luxury properties, rose to 73.39 on Oct 25, from 73.37 the preceding week, Centaline said in an Oct 30 report. Excluding residences worth HK$10 million or more, it fell 0.3%, the most in six weeks, to 71.16. – Bloomberg LP

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