Examples they cite include:
- The sale of 94 units in the luxury residential project Larvotto, each worth more than HK$30 million (RM12.38 million), in just two days since its launch on Saturday.
- The sale of more than HK$9 billion worth of flats in two major new projects — The Hermitage and Lime Stardom — in just two weeks this month.
- A 15% surge in prices so far this month in Tuen Mun, an area that until recently had lagged the broader recovery in the market and is now playing catch-up.
- A deal done on Lamma Island that saw a two-storey village house of 1,300 square feet with a 1,200 sq ft garden change hands at a record price of HK$5,200 per square foot this month. That put a total price tag of HK$6.8 million on the house.
Since owners were not budging on their asking prices Lau eventually decided to buy a flat last month to take advantage of low interest rates and to hedge against an erosion of her savings from inflation.
Her choice was a 500 sq ft unit in Caine Road, Mid-Levels, for which she paid HK$3.5 million in May. "I have been working for 12 years and had saved enough to put down the deposit, and so I decided it was time to buy," she said. Having made a 30% down payment, she raised a mortgage to pay for the balance and is now making a monthly repayment on her home loan of HK$12,000.
Lau's purchase was one of the 67,073 sales and purchase agreements in the residential market in the first half of the year recorded by the Land Registry. The total value of the deals was HK$266.91 billion — versus 52,595 deals in the same period last year valued at HK$205.5 billion.
Patrick Chow Moon-kit, the head of research at property agency Ricacorp Properties, said buying confidence had strengthened after Sun Hung Kai Properties paid a higher-than-expected HK$10.9 billion for a development site in Ho Man Tin, and strong sales were recorded in two new projects put on the market since June 30. "The positive sales outcome of the new projects prompted home seekers who were stalling to make a move, since they worried that prices would increase further. Some buyers visited a flat just once and decided immediately to write out cheques," he said.
Chow expects the total number of home sales to reach a record of about 137,000 this year, exceeding the previous record when 125,062 flats were sold in 2007.
The 964-flat Hermitage was the first residential project launched after the June 1 introduction of guidelines by the government aimed at enforcing greater price transparency.
Developer concerns that the rules would hamper their marketing campaigns proved unfounded as by July 16 some 685 units or 90% of the 762 units on offer were sold. The project, developed by a consortium comprising Sino Land, Chinese Estates Holdings and Nan Fung Development, has so far generated revenues of HK$8.2 billion, market sources said.
Under the new system, developers must release price lists three days before flats go on sale to allow homebuyers time to study prices. Previously, developers released only a few selected prices 24 hours before the launch of a sale, leading to accusations of manipulation.
"We are seeing the beginning of a market bull run," Midland Realty chief analyst Buggle Lau Ka-fai said, adding there was little evidence of speculation driving demand and most buyers were end-users.
In the first half of this year, Midland data shows there were just 1,015 confirmor transactions — deals done by buyers who make a down payment and then resell their properties before the deadline for completing their purchases. That compared with a peak of 6,907 confirmor deals as the market was powering its way to record high prices reached in the first half of 1997 before the outbreak of the Asian financial crisis.
As prices continue rising, first-time homebuyers with tight budgets have been forced to outlying locations where flats are less expensive.
"It is a challenge to find a unit of around 470 sq ft in central areas for under HK$1.3 million or so. But there are many choices in Tuen Mun, where a sudden increase in demand has boosted prices by 15% in the past two months," said Perry Fong Kai-ming, the sales director at Centaline Property Agency's Tuen Mun and Tin Shui Wai branches.
Until recently prices in the area had lagged the overall market and two months ago a 600 sq ft unit at Miami Beach Towers changed hands for HK$1.8 million.
But now asking prices for similar units in the block had risen to HK$2.1 million, Fong said. "As more buyers come looking for bargains in the area, transaction volumes are likely to increase to 500 deals in June from 400 in May," he said. — South China Morning Post
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