Hong Kong home sales slow as buyers wait to see effect of new rules

HONG KONG: Hong Kong’s secondary home market remained quiet last week and sales are likely to slow further until the implementation of a new law on sales practices that will take effect on Monday.

There were 97 transactions in the 50 largest private housing estates monitored by Ricacorp Properties for the week ended April 21, one up on the 96 deals of the previous week. The numbers are significantly lower than the average of 207 sales in the past 52 weeks, and about 255 sales per week last year.

A new law to shield buyers from dishonest practices when buying new flats takes effect on Monday and Ricacorp director David Chan said market players had adopted a wait-and-see approach. Some buyers appeared to have postponed purchases until the new law comes into force.

With more flat owners lowering prices, buyers were expecting steeper cuts, of at least 10%, Chan said. But most sellers refused to cut deeper than 10%, which had slowed sales.

Chan expected secondary flat sales to remain low this week due to the gap in price expectations between buyers and sellers and buyers’ preference to wait for the introduction of the new law.

UBS Hong Kong and China property research head Eva Lee said the law could also see some developers put the release of new projects on hold as they adjusted to the new rules.

“We may now see a period during which no new projects will be launched in the coming two to three weeks,” she said, adding that the new law may also delay the government’s pre-sale approval process. “Sales volumes may recover gradually in early or mid-May.”

BNP Paribas Securities said in a report  some developers hastened sales to avoid extra costs, and prepared brochures and other measures to comply with the new rules. ­— South China Morning Post

“Since more developers offered new incentives to boost sales … we expect some potential buyers to be attracted by primary projects. This will support primary volumes, but volume in the secondary market may remain at a relatively low level,” it said. — South China Morning Post

This article first appeared in The Edge Financial Daily, on April 26, 2013.