Property sales in Hong Kong fall after introduction of new marketing rules
The volume of residential property sales in Hong Kong the first half of 2013 fell by 32.1% year on year, according to the latest monthly report from real estate firm Knight Frank.
It points out that the lowest volume of transactions so far this year was recorded in April, according to Land Registry figures, when only 3,427 sales were recorded.
The drop in transactions follows the enforcement of the Double Stamp Duty in February and the Residential Properties (First-hand Sales) Ordinance in April. Since the Residential Properties Ordinance, which requires that vendors regularly update and maintain marketing materials relating to the sale of residential property, came into effect less than 500 units have been available for sale.
However, the firm believes that more flats will be available in the coming months when developers keen to accelerate sales in the second half of the year to fulfil annual sales targets launch or re-launch projects after having modified or prepared their marketing materials to comply with the ordinance.
Despite the fall in residential transactions in the first half of the year, prices showed no significant change. Knight Frank’s records show that luxury prices dipped only 2.2% in April, but have since remained stable.
Long term investors and foreign buyers have been staying away from the market, which is now dominated by first time buyers and end users. ‘We expect this smaller customer pool will result in residential sales finishing the year 10% lower than in 2012. Mainstream property prices are expected to fall around 10% over the course of 2013, while prices in the more resilient luxury sector will fall 5%,’ the Knight Frank report says.
Transactions in the secondary market dropped a substantial 38.8% year on year, in the first five months of 2013. However, after the government announced an interim scheme to allow eligible ‘White Form Applicants’ to buy second hand Home Ownership Scheme (HOS) flats without paying the usual premium, the HOS and public housing market was stimulated.
Indeed, data from the Land Registry show that more than 75% of flats sold in June were small to medium sized units costing less than HK$5 million.
In the first hand property market, the government announced that the presale period for uncompleted flats would be extended from 20 months to 30 months, meaning developers will be allowed to pre-sell unfinished projects 10 months earlier, to meet market demand.
The change, which took effect in July, is not expected to affect the demand and supply situation, as it will not increase actual supply volume.