Residential sales in Hong Kong set to fall due to new marketing rules
Sales of new homes in Hong Kong are expected to hit a record low in May following the implementation of new rules governing the residential sector, according to the latest report from Knight Frank.
The Residential Properties (First-hand Sales) Ordinance came into effect at the end of April and it requires vendors to regularly update and maintain marketing materials relating to the sale of residential property.
The main objective of the new rule is to protect the interests of the purchasers of residential properties by enhancing transparency and fairness and in the run up to the changes many developers offered substantial discounts in a bid to sell properties before the end of April so they wouldn’t have to renew all their sales material.
In May, only three residential projects offering less than 200 units were available for sale and the transaction volume for new home sales in the month is expected to hit a record low as developers prepare new marketing materials to comply with the tighter sales regulations.
Meanwhile, sentiment in the resales market recovered slightly, with an increase in transactions of small to medium sized units due to vendors softening their stance on asking prices and there being a lack of available units in the new home market, says the Knight Frank report.
According to the Rating and Valuation Department, some 13,551 new homes are forecast to be completed in 2013 and 15,817 in 2014, with the majority located in the New Territories. Meanwhile, the Transport and Housing Bureau has forecast that 67,000 new homes will be available over the next three to four years, an average of 16,750–23,333 units a year.
‘With the various tightening policies in place and market sentiment remaining cautious, we believe there will be a drop in activity in both the new home and resale markets over the next few months,’ says the report.
Sales in all sectors are likely to be affected to some extent, according to Thomas Lam, Knight Frank’s head of research and consultancy for Greater China. ‘Residential sales will fall about 10% this year from 70,000 to 75,000 units, with mass residential prices dropping around 10% and prices in the more resilient luxury sector falling 5%,’ he said.