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Home sales drop 58% in Hong Kong
Source: Bloomberg News |
00:49 UTC+8 June 14, 2011
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SALES at 10 of Hong Kong's biggest private residential developments fell 58 percent at the weekend from a week earlier after the city government raised minimum down payments and deposits for foreign buyers.
Seventeen transactions took place, according to Centaline Property Agency Ltd, after the Hong Kong Monetary Authority on Friday said buyers of homes costing more than HK$6 million (US$770,000) will have to increase up-front payments. Foreign buyers must deposit an additional 10 percent.
The measures to curb property prices that have surged about 70 percent since the beginning of 2009 may further dent buyer sentiment that is already showing signs of weakening following a recent drop in home deals and as banks accelerated mortgage interest rate increases this year. It was the government's fourth attempt since October 2009 to curb inflating residential values, rated by Savills Plc as the world's most expensive.
The measures "show the government's determination to hold prices at their current level," said Lee Wee Liat, a property analyst at Samsung Securities Ltd in Hong Kong. "It may signal they will take more significant steps and that's to limit the number of units foreigners or mainlanders can buy in the city."
Property transactions fell for a fifth straight month in May. Still, home prices gained 1.3 percent in the week ended June 5 from the previous seven days, according to Centaline.
The curbs "came at the right time as there are signs suggesting prices may take off," Lee said.
Properties costing HK$10 million or more will require a 50 percent down payment, HKMA Chief Executive Norman Chan said on Friday.
"These new rules will have an immediate impact," said Jeffrey Ng, a senior executive director at Hong Kong Property Services Agency Ltd, a unit of Midland Holdings Ltd. "It will slow down the pace of those who are looking to buy properties."
Borrowers whose income is primarily from outside Hong Kong will need to make a higher down payment unless they can demonstrate a "close connection" to the city such as evidence they work for a local employer or that an immediate family member resides in Hong Kong, the HKMA said.
"This will definitely affect our clients from both overseas and Chinese mainland," said Louis Chan, managing director for residential properties at Centaline. Chan predicted home transactions will slow 10 to 20 percent over the next few weeks.
Seventeen transactions took place, according to Centaline Property Agency Ltd, after the Hong Kong Monetary Authority on Friday said buyers of homes costing more than HK$6 million (US$770,000) will have to increase up-front payments. Foreign buyers must deposit an additional 10 percent.
The measures to curb property prices that have surged about 70 percent since the beginning of 2009 may further dent buyer sentiment that is already showing signs of weakening following a recent drop in home deals and as banks accelerated mortgage interest rate increases this year. It was the government's fourth attempt since October 2009 to curb inflating residential values, rated by Savills Plc as the world's most expensive.
The measures "show the government's determination to hold prices at their current level," said Lee Wee Liat, a property analyst at Samsung Securities Ltd in Hong Kong. "It may signal they will take more significant steps and that's to limit the number of units foreigners or mainlanders can buy in the city."
Property transactions fell for a fifth straight month in May. Still, home prices gained 1.3 percent in the week ended June 5 from the previous seven days, according to Centaline.
The curbs "came at the right time as there are signs suggesting prices may take off," Lee said.
Properties costing HK$10 million or more will require a 50 percent down payment, HKMA Chief Executive Norman Chan said on Friday.
"These new rules will have an immediate impact," said Jeffrey Ng, a senior executive director at Hong Kong Property Services Agency Ltd, a unit of Midland Holdings Ltd. "It will slow down the pace of those who are looking to buy properties."
Borrowers whose income is primarily from outside Hong Kong will need to make a higher down payment unless they can demonstrate a "close connection" to the city such as evidence they work for a local employer or that an immediate family member resides in Hong Kong, the HKMA said.
"This will definitely affect our clients from both overseas and Chinese mainland," said Louis Chan, managing director for residential properties at Centaline. Chan predicted home transactions will slow 10 to 20 percent over the next few weeks.
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