Sales dry up as luxury flat owners lift prices

HONG KONG: Luxury flat owners on Hong Kong Island have scared off buyers by raising their prices after the prime site in Mount Nicholson Road on The Peak sold for HK$10.4 billion (RM4.24 billion), the third-highest land price ever, last week.

Raymond Cheung, a director at property agency Ricacorp Properties in Mid-Levels East, said vendors had raised their prices 10% since the auction on Wednesday, Aug 4.

"Home seekers are hesitating as the prices have been raised sharply," he said. "Only two or three flats in Mid-Levels East were sold over the weekend."

It was a different story in Kowloon where buyers were attracted to the remaining units at phase two of Cheung Kong (Holdings') Celestial Heights luxury project in Ho Man Tin.

"The developer didn't raise the asking price after the auction. It seems that they want to sell the units as soon as possible," an agent said.

The units are going for about HK$11,000 per square feet, 8.3% less than the HK$12,000 per sq ft that flat owners in the first phase of the project have been asking in the secondary market. Agents estimated Cheung Kong sold 35 units last month, leaving only 18.

Elsewhere, property agents said transactions in the secondary market were flat last week.

Cheung expects sales will stay at the current level for the next two weeks. Agents are waiting for the luxury residential sites at Argyle Street in Ho Man Tin and Ede Road in Kowloon Tong to go up for auction on August 17 and 31 respectively to give another indication of the way the market is going.

Property consultant Colliers International data shows the average price of luxury residential homes has risen 7.2% to HK$16,836 per square feet in the first half from HK$15,703 per sq ft at the end of December last year.

During the period, properties on The Peak registered the strongest growth of 8.8%.

Colliers International director Simon Lo Wing-fai expects the luxury market will see a further 10per cent rise over the next 12 months, while rents will grow 15%.

Nicole Wong, regional head of property research at CLSA, said Hong Kong property was very expensive. "Medium home prices are about 15 times medium family income. It means it would take people 46 years to pay off the debt if they bought a 500 square foot unit and used 30% of the family income to pay the monthly mortgage," she said.

However, she still expects prices to surge a further of 15% in the next 12 months due to the limited new supply, low interest rate and strong job market. — South China Morning Post
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