Hong Kong developers unlikely to increase prices of new flats as they try to offload 8,500 unsold units, Centaline says
Hong Kong builders will probably leave their prices virtually unchanged in the second half of the year, having accumulated close to 8,500 unsold units since 2016, according to Centaline Property Agency.
The developers may be keener than they have been in the past to offload the stock because of the government’s proposed “vacancy tax” which would penalise them for holding on to finished units.
“Developers will hardly want to increase selling prices by 20 to 30 per cent like they did in the first half of this year as buyers will have more choices,” said Wong Leung-sing, a senior associate director at Centaline Property Agency.
“Developers will release additional units in the subsequent batches either at the same as the launch price or just edged up a by meagre increase.”
Although still high at 8,500, the number of unsold apartments in Hong Kong has declined for three consecutive months as developers sped up sales in the first half of the year to cash in on positive market sentiment and to avoid the new levy on unoccupied flats. The agent said there were 10,000 unsold units in 2018.
“The vacancy tax may be one of the reasons for the fall in their holdings of unsold flats,” said Wong.
On Wednesday, Great Eagle Holdings released a new project, Ontolo, with prices starting at HK$11,446 per square foot, the cheapest on the market in the upscale residential area Pak Shek Kok, near the Science Park.
Lived-in homes in the city dropped 1 per cent to an average of HK$13,606 per square foot last month after hitting a record in May, according to Midland Realty. Still, prices have increased almost 10 per cent since January.
Chief Executive Carrie Lam Cheng Yuet-ngor proposed the vacancy tax last year as part of efforts to curb runaway property prices by forcing developers to add more housing to the city’s supply.
Some developers had held on to finished units for more than a decade as they waited for the right moment to cash in.
Under the proposal, completed homes left unsold for more than six months after receiving an occupation permit would be liable to a levy of 5 per cent of the property value.
According to government figures, 9,000 private flats with occupation permits currently remain unsold since their completion in 2012.
Centaline said its data covered 62,177 units at 108 new residential projects launched for sale since 2016.
Wong expected the number of unsold, completed new flats would be below the government’s estimate of 9,000 by the end of this year.
Of the unsold flats, the eastern part of the New Territories has 3,074 units available for sale, according to Centaline.