Property deals in HK climb to 31-month high

HONG KONG: Property sales in Hong Kong rose to a 31-month high last month but the market is expected to slow significantly as government cooling measures make buyers more cautious.

The Land Registry recorded 16,946 sale and purchase agreements for residential, commercial and industrial units, up from 14,885 in July. The total sales values amounted to HK$80.2 billion (RM32.13 billion), representing a 13.4% rise month on month, and an increase of 30.7% from a year earlier.

Of the 16,946 deals, 86.74% were residential units, which saw sales volume increase 13.44% from July's 14,699. The value of sales rose 32.66% from the previous month to HK$69.22 billion.

Midland Realty chief analyst Buggle Lau Ka-fai said the growth was spurred by strong sales of luxury units in the primary market. There were 1,355 sales of homes valued at HK$10 million or above, representing growth of 47% from July. Total values of luxury homes grew 94% to HK$33.91 billion, according to the data compiled by Ricacorp Properties.

But Lau said sales activity could fall 40% to the 10,000 level when the Land Registry announces the September figures next month. August's figure better reflected market activity in July because of the four-week time lag between transactions and registrations.

Sales activity has slowed in the past two weeks following the government announcement of measures to cool the market, according to Lau.

The government on August 13 banned the quick resale of flats and vowed to put more land on the market. It also tightened mortgage lending from the current 70% of a property's value to 60% for properties costing HK$12 million or more and those not for self-use.

The buoyant housing market meant the number of mortgages advanced by Hong Kong banks for purchases of completed flats in the first eight months of the year rose 69% to 104,021, according to mortgage broker mReferral. It predicted the full-year figure would jump to 140,000 — the highest level since mReferral began compiling mortgage data in 2005.

But in August, the number of mortgages fell 6% month on month to 13,576 as the property market entered a period of consolidation.

Lee Wee Liat, regional property research head at Samsung Securities, said the government could claim some victory in taming transaction volume and moderating price growth.

"Yet, the high frequency of government land auctions has failed to dent bullish developer and buyer sentiment. Mainland demand remains robust," he said.

On Tuesday, Kerry Properties beat 15 other bidders at an auction to snap up a residential site in Kowloon Tong for HK$1.285 billion, or HK$16,587 per square foot — a record in Kowloon.

"In [next month's] policy address, the government will likely reiterate a continuation of existing tightening measures, as well as possibly foreshadowing additional aggressive ones in order to restrain pent-up demand," Lee said. "We expect the key policy focus to be on further ramping up supply and providing a limited number of public housing units."

He expects volume to gradually recover after the policy address. — South China Morning Post