Hong Kong developers are gradually raising prices amid increasing confidence in the outlook of the city’s housing market following a slew of measures that have caused buyers to step into the market.
Chinachem Group on Monday raised the price slightly of the second batch of flats at the 198-unit Echo House residential project in Cheung Sha Wan after 5,500 buyers registered for 100 units going on sale.
The batch of 50 units will have an average price of HK$15,440 (US$1,987) per square foot after discounts, 3.7 per cent higher than the HK$14,888 in the first list. Echo House is a joint development with the Urban Renewal Authority.
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“Supported by multiple favourable factors, including interest rate cuts, a recovering stock market and policy measures benefiting the real estate market outlined in the policy address, market sentiment has noticeably improved,” said Derek Chan, head of research at Ricacorp Properties.
“The transaction volume of new properties has significantly increased, showing robust performance with buyers actively entering the market. Developers are in a position to implement slight price increases.”
The price of the first 50 units of Echo House released last week was the lowest in the district since 2016, when Henderson Land launched its Park One project at HK$13,000 per square foot, according to property agents.
The price increase comes after the government relaxed mortgage financing, allowing buyers to borrow as much as 70 per cent, regardless of the value or intended use of the property. The debt-servicing ratio has also been raised to 50 per cent from 40 per cent, with the same guidelines for residential and non-residential properties.
Homes valued at more than HK$30 million will be entitled to 70 per cent financing, compared with 50 per cent to 60 per cent previously, according to the Hong Kong Monetary Authority.
Likewise, more interest rate cuts are in the offing following the initial 50 basis points reduction last month by the US Federal Reserve and the HKMA.
Chan added that if a batch of flats sells well, developers will have room for minor price adjustments with each subsequent release.
CK Asset Holdings and Sun Hung Kai Properties sold a combined 407 units on Saturday and Sunday, according to agents. That is more than 80 per cent of the 504 aggregate units that were available at Blue Coast II in Wong Chuk Hang and Cullinan Sky Phase 2 in Kai Tak, respectively, on the first weekend following the policy address of Chief Executive John Lee Ka-chiu.
Buoyed by the policy address, developers have accelerated project launches, said Sammy Po Siu-ming, CEO of Midland Realty’s residential division.
“Although some developers have increased the prices of remaining units in certain new projects, most are still actively selling their inventory,” Po said. “Therefore, the pricing of new projects remains generally conservative, [as developers] prioritise price over volume.”
Hong Kong developers still hold an estimated 20,000 unsold new homes, with another 25,000 units of supply coming next year, according to CBRE Hong Kong.
However, not all developers feel confident about raising prices.
Early Light International Holdings, controlled by tycoon Francis Choi Chee-ming, has marginally reduced the average price of The Uppland project at Gold Coast Bay in Tuen Mun following poor uptake in the previous round.
The price has been lowered to an average of HK$11,770 per square foot from HK$11,813 in August. The company is selling 152 units and another 32 via tender on Friday.
In August, the project found buyers for only 12 per cent of the 139 flats on the first day of the launch.
More from South China Morning Post:
- Hong Kong mortgage tweak creates ‘positive expectation’ in property market: Paul Chan
- Hong Kong can dig deeper into policy toolbox to revive property market: analysts
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