Home buyers in Hong Kong bought just over half of the flats offered by a major Chinese developer at a new site in the city on Saturday despite incentives, in another sign the world’s most expensive property market is cooling off.
Sales agents described the outcome –181 of 310 flats sold – as much worse than expected, despite discounted mortgage rates and cash rebates meant to entice at the launch of Le Pont, a six-tower residential project located in Tuen Mun in the northwestern New Territories.
Vanke Property (Hong Kong), a subsidiary of China’s second-largest developer, developed the site. Vanke is a bellwether of the city’s housing market, which has reached a tipping point after a boom running more than two years. Sentiment has been pulled down by rising mortgage rates and the government’s cooling measures.
“The units would have been all sold if not for the poor market sentiment at the moment,” said Louis Chan, vice-chairman and chief executive of residential division for Asia-Pacific at Centaline Property Agency, one of the firms commissioned for the sale.
A combination of factors contributed to the gloomy wait-and-see attitude, Chan believed, including worries about Hong Kong’s economic outlook amid escalating trade tensions between China and the US, higher borrowing costs and a sluggish stock market.
In addition, Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor is widely expected in her annual policy address on Wednesday to unveil plans for land reclamation to better tackle the city’s land supply shortage and property crunch over the long term.
LePont is one of the first projects to be sold after Hong Kong commercial banks raised benchmark lending rates for the first time in 12 years by 12.5 basis points last Thursday. The move effectively increased the cost of mortgage repayments.
In partnership with Centaline Mortgage Broker, Vanke offered buyers a lower mortgage rate of 2.275 per cent – 10 basis points lower than the standard 2.375 per cent – to counter the impact. It also gave out cash rebates equivalent to 1.95 per cent of the loan amount taken out.
But buyers were unswayed. The city’s home prices in August dropped for the first time in 28 months, after surging as much as 45 per cent over the period, according to the official Rating and Valuation Index.
“The result is worse than what we expected,” said Sammy Po, chief executive of the residential division at Midland Realty.
However, Po called the result“not completely negative” given that buyers already snapped up the first batch of 347 flats launched on Monday.
The 310 flats offered on Saturday ranged in size from one to three bedrooms and measured between 335 and 829 square feet.
Prices rose to HK$12,298 per sq ft, compared with HK$9,878 per sq ft for the first batch.
Vanke’s first independently developed residential project in Hong Kong, LePont consists in total of 1,154 flats, including 30 bungalows.