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Hong Kong residential sales market sees glimpse of stabilisation

One of the notable performances was the overwhelming response to the latest sales launches of new residential developments in Kowloon and the New Territories. 

"The strong sales performance of the latest sales launches could be attributed to two main factors.  The developers have adopted a pragmatic approach when setting the asking prices of those new residential developments.  In addition, local banks are more relaxed in their lending policy, particularly when compared to the restrictive measures adopted in 4Q 2008," said Simon Lo, Director of Research & Advisory.  "At present, local banks have relaxed mortgage lending to the mass sector with improved loan-to-value ratios.  Individual banks even offer innovative fixed-rate mortgage.  These serve as financing incentives to attract potential buyers."

Besides, the latest market sentiment has been driven by the rebound of the stock market.  This helps releasing the pent-up demand of the potential buyers who have kept their purchasing on hold since the start of the global financial crisis last year.

In the luxury residential market, the sales activity also saw a notable improvement in 1Q 2009.  The number of residential sales transaction, with lump-sum price over HK$10 million, in the traditional luxury districts rose by 100.0% quarter-on-quarter (QoQ) from 82 in 4Q 2008 to 164 in 1Q 2009, while the total turnover surged 109.5% QoQ to HK$4,737 million.  Meanwhile, the number of premium luxury residential sales transaction, with lump-sum price over HK$50 million and located in the traditional luxury districts, increased 90% QoQ. 

"The buyers in the current market are mainly dominated by end-users including locals aiming at upgrading their living environment, expatriates and industrialists, with a small percentage of investors and buyers from Mainland China,"   said Ricky Poon, Executive Director of Residential Sales.  "If the market continues to see positive stimuli such as a more relaxed lending policy and a sustained improvement of the stock market, the volume of sales transaction will continue to grow and is anticipated to edge up by 15-20% further."

Despite the significant rebound in the number of sales transaction, the improvement of luxury residential prices was much more subtle.  In March 2009, the average luxury residential price slightly edged up by 0.2% month-on-month to HK$10,652 per sq ft in March 2009, while the QoQ change remained in the negative zone.  "Amid the uncertainties of the global economy and the anticipation of negative local economic growth in 2009, the luxury residential market still sees a lack of new occupational demand," commented Simon Lo.

"Although a full recovery of the luxury residential sales market is yet to see, its prices, which significantly dropped in the past two quarters, are observed to stabilise and expected to move sideways in the short-to-medium term."