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HK records 39% fall in home sales
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The number of properties sold in Hong Kong fell by more than a third last year to a 17-year low as a surge in a sales tax, designed to burst a price bubble, turned off buyers in one of the world’s most expensive cities.
Despite steep discounts offered by the city’s influential property developers, the total number of sale and purchase agreements concluded in 2013 was 70,503, down 39 percent from 2012, according to the Hong Kong Land Registry.
The value of deals dropped 30 percent from a year earlier to HK$456 billion (US$59 billion) and forecasters expect the downturn to continue this year. With local tycoons like Li Ka-shing warning of the impact on his property business last year, in November Deutsche Bank said Hong Kong home prices could drop up to 50 percent over the following 12 months.
Last February’s doubling of stamp duty, or tax, on residential transactions to as much as 8.5 percent of the sale value was designed to prick the city’s property bubble.
But it has yet to stop the price of homes creeping up: according to property services firm Centaline Property, overall home prices edged up 3 percent for the year, and have jumped 120 percent since 2008.
That could change soon, making life tougher for the property development industry.
“Since the new measure is still there, I don’t believe the worst is already over,” said Ricky Poon, executive director of residential sales at real estate services firm Colliers International in Hong Kong.
“Developers will have less and less in profit margins. That’s for sure,” Poon said. He forecast mass-market home prices will drop up to 20 percent in 2014.
Li’s Cheung Kong (Holdings) Ltd, the city’s second-largest developer, offered price discounts of up to 25 percent for a new home development launched last weekend, one of the steepest cuts seen since new sales rules came into effect last April.
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