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Hong Kong property outlook - and Data Base

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HONG KONG - UPDATED Property Charts

 

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/source: http://www.centadata.com/cci/cci_e.htm

Bellwether : Henderson Properties (HK:12) ... update / HK1-CK : HK16-SHKP : HK83-Sino

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Note: HK12 never predicted the present breakout, which can be explained by:

Ultra-low interest rates, and aggressive buying by Mainlanders

 

OTHER:

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IslHarbV.png.jpg

 

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Article in today's Standard: Homeowners feel pinch as curbs bite

 

Wong's bullishness comes despite anecdotal evidence that homeowners are cutting their losses.

 

One such case saw a homeowner losing HK$460,000 after selling a 511-square-foot flat at Metro City Phase 1 in Tseung Kwan O for HK$2.94 million, or HK$6,140 psf.

 

"He [the home owner] bought the flat in 1997 - when prices were at their peak - and chose to sell even though he was making a loss because he feared a market downturn," said Ken Wan, a Ricacorp agent in the district.

 

One mainlander sold a 1,303-square-foot flat at the Sausalito in Ma On Shan for HK$8 million, or HK$5,753 per square foot, at a loss of HK$300,000. He bought the flat in 2007.

 

Are we starting to see the first signs of a sell-off?

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Are we starting to see the first signs of a sell-off?

The Standard is reporting a daily drumbeat of price cuts, almost as if the want to "assist" the market lower.

 

SCMP mentioned that Hang Lung may have decided to delay the launch of the remaining 1100 flats at The Long Beach.

HL may be concerned that last week's LTV changes may undermine the market for a while, and they want to launch in a more bullish environment.

 

HL completed these units in 2004, so it has been a long and profitable wait.

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According to the Standard,

SHKP may be going ahead with the launch of Imperial Cullinan tomorrow

 

Today's article suggests:

 

+ IC : "asking at least HK$20,000 psf"

 

+ LB : "will likely be priced at HK$15,000 psf, 20% higher than secondary units in the area"

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According to the Standard,

SHKP may be going ahead with the launch of Imperial Cullinan tomorrow

 

Today's article suggests:

 

+ IC : "asking at least HK$20,000 psf"

 

+ LB : "will likely be priced at HK$15,000 psf, 20% higher than secondary units in the area"

 

It will be interesting if anyone will buy at those prices. Perhaps they will have a "soft" opening where they limit the number of flats available allowing them to test the waters. If the sale is a failure it could be a turn is in place.

 

Another catalyst could be the global economy which seems to be turning downward. Global indices hugely down and I could see it tracking this way into August as the US deals with its debt ceiling issue - not alot of confidence with that overhang.

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Here's IP Global's HK Summary

 

assets_buying-asia_countries_hk.jpg.9e44bd6b48a7a1b13d87d0323ce0d2ee.png

 

(They sell property - No mention of a possible peak herein.)

 

Hong Kong hotter than ever!!!

Searching for one of the most vibrant property markets on the planet today? Look no further than Hong Kong. For example, earlier in 2010, one private residence in Hong Kong's most prestigious area known as "The Peak" sold for an incredible US$1.3 billion!

 

Government Cooling Measures

With such an influx of outside money coming in (an estimated 20% of flats purchased last year were by Mainland buyers), a growing amount of local complaints finally forced the Hong Kong government to create new restrictions for buyers. These include a Special Stamp Duty, ranging from 5% to 15% on top of the current stamp duty on the short-term re-sale of housing within 2 years.

 

Hong Kong Monetary Authority lowered the Loan to Value ratio for residential properties worth $8 million or above, to 50% or 60% and for all non owner occupied residential properties of any value to 50%.

 

The Near Future...?

Hong Kong is currently going from strength to strength with huge capital reserves--currently the world's seventh largest holder of foreign currency reserves at $266 billion. There is low unemployment (just over 4%) and continued demand for property (largely supported by a continued influx of interest from the Mainland). This combined with an increase in land supply means that prices will continue to rise though at a slower rate due to recent government measures. Analysts have predicted house prices to increase by 10%-15% in 2011 .

 

/more: http://www.buying-asia.com/markets/hong-kong/hong-kong-market-update.html

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Back down, as the LTV restrictions "bite":

 

INDEX . . . . . . . . . . . . . .: Index : Weekly : Prev.Mo.

[Centa-City Leading Index] 99.70 : -1.01% : +2.32 %

[Mass Leading Index-------] 96.56 : -1.14% : +2.28 %

 

update :: http://hk.centadata.com/cci/cci_e.htm

 

The showflat for Imperial Cullinan supposedly opens on Monday, an agent told me.

That's an unsual day to open a flat.

 

== == ==

Asia Housing Boom Stalls as Tightening Puts Brake on Prices

 

June 17 (Bloomberg) -- From Mumbai to Melbourne, Asia’s property boom is stalling as the world’s highest interest rates and government efforts to curb prices take hold.

 

In China’s biggest cities, growth slowed in April after the government stepped up property measures. In India and Australia, prices are falling after the steepest interest rate increases among major economies. In the financial hubs of Hong Kong and Singapore, price growth is moderating after increased deposit requirements and land releases. In Japan, the worst earthquake on record snuffed out signs of a recovery, while South Korean banks remain weighed by soured property loans.

 

“Across Asia-Pacific, you have seen a policy induced pullback,” said Rod Cornish, head of real estate strategy at Macquarie Capital Advisers in Sydney. “It’s a required pullback because if some of these markets had been allowed to continue, you would have had more overbuilding, more overvaluation, and a bigger correction down the track.”

. . .

‘Bubble’ Warning

 

Hong Kong, which Savills Plc says is the world’s most expensive place to buy an apartment, reported the number of home-sale transactions fell for a fifth straight month in May amid rising mortgage rates. Home prices have surged about 70 percent since the start of 2009 on record-low borrowing costs and an influx of buyers from other Chinese cities.

 

The city’s Chief Executive Donald Tsang said in an interview in Melbourne today that home prices are “quite frightening” as growing wealth in China fuels increases of 2 percent a month.

 

HSBC Holdings Plc and other lenders raised mortgage rates in Hong Kong after the central bank in April warned of the risk of a “credit-fueled property bubble.” Hong Kong home prices could fall as much as 20 percent in 2012 because of higher mortgage rates, according to Barclays Capital Asia Ltd.

 

The Hong Kong Monetary Authority has tightened rules on mortgage lending four times since October 2009, most recently on June 10 when it raised down payments for homes costing more than HK$6 million ($771,000) and increased deposits for foreign buyers. HKMA Chief Executive Norman Chan said property curbs introduced by the government have reduced speculation.

 

“Credit conditions have become more onerous and that has helped take some steam out of the property market across Asia,” said Vishnu Varathan, an economist at Capital Economics (Asia) Pte in Singapore. “Gains in property markets around the region have slowed but they haven’t decisively peaked.”

 

/more: http://www.businessweek.com/news/2011-06-17/asia-housing-boom-stalls-as-tightening-puts-brake-on-prices.html

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From the AX forum

(1)

Hi Newbie to this forum here - ex UK based investor with property on HK island. Some good debate here and some great calls over the past couple of years by some posters particularly since I've been following the debate.

 

My take on the market and direction of prices is as follows. We have two markets in Hk luxury and mass. My interest is in luxury but I try to understand the dynamics of both.

 

Mass is 98% or so of the total driven by supply and demand of property and money. Mass was very cheap in the early 2000's having fallen 66% or so from the peak in 1997. It has now risen 200% to around the 100 level indicated on Centaline. The price has risen in part because of low interest rates and negative real interest rates leading to a supply of money, part due to rising wages and inflation, part due to the peg and the relative strength of HK$ vs US$ creating liquidity in the banking system and part due to limited supply of new property. Of these factors we will see negative real interest rates for two or so years yet as the US problems continue to play out and hosuing market bottoms there and employment picks up. Local banks seem keen on a gradual increase in rates but not a shock to the system per se which is quite reassuring. As for supply govt is making more land available but not necessarily where people want and this will take a couple of years to work through the pipeline. The unknown seems to be HK$ strength vs US$ where a bout of deflation could reduce money supply or more money printing could increase it. I'm betting on the former followed by the latter. So I would assess mass as having another two to three years left of jagged rises fitting with a 16-18 year property cycle for HK and a top sometime between 2013 and 2015. I read the latest cooling announced yesterday as an attempt to slow these rises down and to appear to be active in colling whilst not making a huge difference to the status quo?

 

In the luxury market we have only 500 units or so a year being supplied which has proved much below market demand. Demand is driven by three things - China millionaires (100,000 HNWI every years since 2008) who are the biggest buyers of new property, trader uppers and high fliers who buy D and E units to increase space and who have found that salary increases have dwarfed rate of supply of larger units in desirable locations and finally the buying and selling restrictions which have made trading less desirable and hence reduced transaction volumes but increased asking prices. For the luxury market given supply is limited I am hoping that the latest round of tightening in China is close to a conclusion we will see a fall of of food and oil inflation this summer and this will further support prices in HK market.

 

So on balance I favour further increases in both markets with luxury harder to call but of all the concerns I think affordability is becoming increasingly stretched and this would may ultimately be the factor that brekas the long run up in prices.

 

Be interested in all view on the above and specifically

- what do HK er's think of SOHO as a luxury location. Is it still being gentrified - it is difficult to keep tabs on this from afar

- is the slowdown in the Chinese property market having much impact on HK market?

- Do people have a target in mind for how far the Centaline index can go? Some would say 100 top match the 97 top but with inflation in between and the lower interest rates this time we could see a bigger rise a bit like the bigger rises in the UK market when comparing the 1988 and 2007 tops?

 

Crestrider (Ma)

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From the AX forum

(2)

Good post, Crestrider.

 

It has encouraged me to make a return post on AX, and this thread.

 

I think there are three major things holding up the property market in HK:

 

+ Rising rents

+ Low interest rates

+ Confidence

 

If something were to "mess with" all three, the market would slide fast. In fact, the government has tried various measures to slow the rise, but they have typically brought a brief drop in confidence and prices, and then prices have continued their climb.

 

Nothing we have seen yet has disturbed rising rents and ultra-low interest rates.

 

A global slowdown does again seem possible, and if that halts job formations in HK, and slows rent rise, it will stabilise the market.

 

A rise in interest rates, which we will see at some point, either through market forces, or through a tougher tightening move by the HK government, would have the potential to bring property prices back down. I doubt the HK government has the stomach for it. But a push in prices, so the Centaline index hit 110 or 120, just might force them to do something. They must have been nervous when it hit 100, and that might have been one of the things that inspired the recent LTV restrictions.

 

- OffThePeak

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Back down, as the LTV restrictions "bite":

 

INDEX . . . . . . . . . . . . . .: Index : Weekly : Prev.Mo.

[Centa-City Leading Index] 99.70 : -1.01% : +2.32 %

[Mass Leading Index-------] 96.56 : -1.14% : +2.28 %

 

update :: http://hk.centadata.com/cci/cci_e.htm

 

 

The breakdown of Centa-city leading is suggesting big percentage down (-4.07%) on HK Island within the week.

 

Change on previous week

HK -4.07 %

KLN 0.74 %

NT (East) 0.26 %

NT (West)-0.36 %

 

I wonder if the -4% just reflects a stalling at high-end (hence lower average price as made up more of lower end properties) or is real? They say average of Constituent Estates but I wonder if they change the weighting according to transaction numbers? If they don't -4% is a shocking number which could indicate the turn, surprised wasn't mentioned in SCMP or Standard today.

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The breakdown of Centa-city leading is suggesting big percentage down (-4.07%) on HK Island within the week.

Change on previous week

HK -4.07 %

KLN 0.74 %

SHKP and Hang Lung will have a challenge in getting the pricing of Imperial Cullinan and Long Beach right.

 

I think the rise in Kowloon last week suggests that there may be some good buying appetite there.

 

The market has slowly awakened to the fact that West Kowloon has many merits relative to certain parts of Hng Kong Island, such as (the grossly over-rated?) Mid-Levels. Try getting from ML to Central on a rainy day, and compare that with West Kowloon to Central by MTR.

 

(There ain't no comparison. And as people also realise that there are GOOD JOBS in ICC, WK slowly gains on the fading attractions of the over-crowded MLs.)

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First time I've seen real major warnings from the Property Developers, warning from Walter Kwok.

 

I guess after his fallout with his brothers allows him to speak his mind before those with direct interest:

 

H.K. Home Prices to Fall Up to 15%: Kwok

http://www.bloomberg.com/news/2011-06-20/walter-kwok-says-hong-kong-home-prices-have-peaked-may-drop-15-this-year.html

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First time I've seen real major warnings from the Property Developers, warning from Walter Kwok.

 

I guess after his fallout with his brothers allows him to speak his mind before those with direct interest:

 

H.K. Home Prices to Fall Up to 15%: Kwok

http://www.bloomberg.com/news/2011-06-20/walter-kwok-says-hong-kong-home-prices-have-peaked-may-drop-15-this-year.html

A SPOILER?

 

Looks like "sour grapes" to me. Walter was booted out of the family firm, and this outburst might have been intended to undermine the launch of Imperial Cullinan this week. IC will be a very expensive project targetted at Mainland buyers and high-end HK based buyers. Kwok's comments may have been designed to destroy some of the potential demand. I imagine that his two brothers were very upset by the timing of such a forecast.

 

No respect to Walter Kwok, but I do not see how you get a meaningful correction when: Yields are at 3%, rents are rising, and interest rates are "stuck" near ultra-low levels of 1%. There's 2% sitting there to be gained, and it protects you from rising rents.

 

Rising rents is one factor Jake Van Der Kamp does not mention in this morning's SCMP column: "Thanks, but no thanks, Mr Wang":

 

"The single biggest reason that housing prices have gone so far up is that interest rates have been way down for an extended period. It is not our doing and there is nothing we can do about it. Breaking the peg to the US dollar would not solve the problem (nb: he says with no evidence?) although it would destabilise our economy.

 

The only other thing we might do is prohibit mainland money from buying property in Hong Kong but, even if we could block the flow of money this way, and this is highly doubtful, it would only force a correction at the luxury end of the market."

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The Property Buying Mania is not over yet in Hong Kong

 

Hong Kong has 1% of the world's Millionaires

 

So says the World Wealth Report from Merrill Lynch. HK gained at the fastest rate in the world last year, up 33.3percent to 101,300 US dollar millionaires. Globally, the rise was 8.5percent from 2009, to 10.9 million. And that means 1% live in Hong Kong.

 

Meanwhile, Asia surpassed Europe in the number of millionaires, leaving it second to North America.

--------------------

 

Maybe this helps to explain how Sun Hung Kai managed to nail down such great prices for Imperial Cullinan. Two penthouse flats there sold at very fancy prices this week:

 

+ 3,532sf flat (w/ private swimming pool), sold for HK$170 million - or HK$48,000 - a record for either Olympic or Kowloon station

+ 2,523sf flat (also with pool) sold for HK$120 million - that's HK$47,000 psf

 

Compare:

Imperial Cullinan's sister project Cullinan, at Kowloon Central is now priced at HK$25,566 psf

 

Adding the word "Imperial" seems to have done wonders for what was thought to be a less desirable location.

article: http://www.thestandard.com.hk/news_detail.asp?sid=32828924&art_id=112446&con_type=1&pp_cat=1

 

My friend must be well pleased. $48,000 psf is darned close to the $50,000 target.

 

From my friend's window in Kowloon:

Looking down on: One of the most expensive flats in Asia ?

A local agent has told me that the Flat under construction in the photo is being offered (by SHKP) at HK$50,000 psf.

That's:

+ US$ 6,400 per sf

+ GBP 3,900 per sf

Hong Kong property prices are mad. Let's see if the builder can achieve anywhere near that.

Until a few months ago, the most expensive flat ever sold in Asia was HK$45,000 psf

LBIC-BillionDlrView.jpg

 

He can now look down on the Mainland tycoon who paid that monster price, and wonder why a small swimming pool and the word "Imperial" can add so much to what might seem by him to be a less advantageous view.

 

IColympic.jpg

 

ICfromstreet.jpg

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EXCERPT from Asia-Xpat, by Off-the-Peak:

 

"Transaction volumes, calls, and buyer purchase interest are really starting to dive from what I can see."

 

Maybe they are just holding onto their cash, awaiting "the Big Boys" - the last chance to buy West Kowloon properties on the sea. That's:

 

+ Long Beach (with 1,104 flats to sell - largest number in HK this year), and

+ Imperial Cullinan (with 650 flats, right next door)

 

One of the penthouses has just sold at $48,000 psf. Mid-Level purists take note - West Kowloon is zooming past you. (!)

 

Some folks who have never made the journey to West Kowloon maybe be journeying to the former "dark side" to find out what they have been missing.

UNQUOTE

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EXCERPT from Asia-Xpat, by Off-the-Peak:

Maybe they are just holding onto their cash, awaiting "the Big Boys" - the last chance to buy West Kowloon properties on the sea. That's:

+ Long Beach (with 1,104 flats to sell - largest number in HK this year), and

+ Imperial Cullinan (with 650 flats, right next door)

Here's what Hang Lung says in their 2010 Annual Report:

 

The_Long_Beach.jpg

The Long Beach

"In 2007, with its tremendous harbor views and world class recreational facilities, 600 units in this prime residential development were sold in just two weeks. With the slowdown in the market, further sales were postponed and plans to market the second phase further sales were postponed and plans to market the second phase of the project were shelved during the current fiscal year. Though price levels recovered earlier year this year to reach 2007 levels, we are choosing to wait a little longer for the best opportunity to release phase two for sale.

 

The remaining five blocks, consisting of 1,234 unsold units, will be released in separate batches over the next few years, as the market picks up. We are fortunate in that we enjoy a strong net cash position. Coupled with our low gearing ratio, it gives us flexibility to accurately time the sale of our residential developments at the right price in the market."

 

Go Home now lists an Imperial Cullinan property:

 

1,700sf / Sale: HK$30mn : $17,647 psf

 

/see: http://www.gohome.com.hk/residential/property/Olympic-Station/Imperial-Cullinan/ad-503219/photos/en/?id=2395064#

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RACE TO RENT as Buyers retreat - say SCMP headline (in Property section)

 

"Flat hunters are finding it increasingly difficult to rent a home in Hong Kong as uncertainty about the market outlook means there are fewer buyers and more tenants."

 

+ Complaints about flats available being snapped up very quickly (within one day)

+ Buyers reluctant to buy, are seeking to rent instead (after seeing prices rises of 10pc or more in 2011)

+ Flats in places like Yuen Long have jumped in rents: from HK$8500-9000 range to HK$10000-12000

+ 42 pc of deals are sales, with the rest rentals, and in a more robust market 70pc might be sales

+ Overall rental index is now at HK$22.13, very close to its Sept.1997 high of HK$22.20

 

Article concludes saying that "summer is always the peak season for the residential leasing market"

 

(Perhaps because people find it easier to shift when children are out of school, and expats flood into new flats in August and Sept.)

 

== == ==

 

I think the agents are trying to talk price lower at the moment, because they are getting heavy resistance from buyers. But I do not think that rising rents are bearish for property. In 2008, before prices collapsed, there was first a big drop in rental demand, as expats left HK.

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WHAT THE DEVIL ... will happen to HK's high property prices ?

 

_54134683_012349208-1.jpg

 

Home prices rose last 24% last year and are up 12% so far this year as newly affluent mainland Chinese snap up apartments here.

 

According to a report by Demographia International, Hong Kong property, at 11.4 times gross median annual household income, is the most unaffordable in the world.

 

Nearly half the population lives in government or subsidised housing and buying their own home is out of reach for many residents.

 

Tycoon targeted

 

And discontent over unaffordable housing is fuelled by the belief that government policy favours powerful property developers over ordinary people.

 

Even billionaire tycoon Li Ka-shing, once feted by residents for his rags-to-riches life story, has become a target of protests.

 

 

Hong Kongers are voicing their dissatisfaction by taking to the streets

Earlier this year a group of young people camped outside the offices of his offices and protesters at the 1 July march carried placards that depicted Mr Li as a devil.

 

They resent the hold Mr Li's business empire has over the Hong Kong economy where it's often said that anyone living here cannot go though a day without spending money at one of his businesses.

 

His conglomerates have a dominant hand in key sectors including property development, retail, electricity generation and container ports.

 

"We remember the days when we called Li Ka-shing superman," says Ms Loh.

 

"There has been a fall from grace."

 

Measures

 

The government has acknowledged that the rising income gap is a problem and is taking some steps to address it, although progress is slow

 

/more: http://www.bbc.co.uk/news/business-14197240

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WHAT THE DEVIL ... will happen to HK's high property prices ?

Hong Kongers are voicing their dissatisfaction by taking to the streets

Earlier this year a group of young people camped outside the offices of his offices and protesters at the 1 July march carried placards that depicted Mr Li as a devil.

AFTER THOSE PROTESTS ... there was a brief selling panic

 

INDICES:

Index : Latest : Previous Week Previous Month

CCLI : 98.89 : - 1.40 % : - 0.81 %

MMLI: 95.33 : - 1.56 % : - 1.27 %

[CCLI = Centa-City Leading Index]

[MMLI= Mass Centa-City Leading Index]

 

Announced every Friday, latest on 2011/07/15; reflecting secondary residential property price from 2011/07/04 to 2011/07/10 (based on scheduled formal sale & purchase date, where formal and preliminary S&P date has a 14-day time lag on average)

 

Investors cut prices in rush to sell flats

Concerns about further government actions to cool a soaring market have investors rushing to realise gains ahead of a potential slump

 

Paggie Leung and Peggy Sito .. Jul 06, 2011 SCMP

 

Flat owners are cutting prices to unload their investment properties because they fear the government will launch more cooling measures on top of last month's tighter restrictions on mortgage loans.

 

Investor Jenny Chan has sold all her property investments - four flats in Mei Foo and an office unit in Mong Kok - during the past few months in anticipation of more measures to come.

 

"I have just kept one unit to live in. I do not know when the government will impose measures again, but prices are too high," Chan said. "I expect prices will drop sooner or later and I am waiting for another property cycle to begin again."

 

According to property agents, more owners of flats of all sizes had cut asking prices by between 5 and 8 per cent. Some had made even deeper cuts of more than 10 per cent, with the aim of offloading their property assets as soon as possible.

 

On Hong Kong Island, a 675 sq ft flat at Lei King Wan sold for HK$5.95 million. The flat owner originally asked for HK$6.5 million but cut the price by 8.5 per cent in the wake of the slow market activity. In Sha Tin, an investor sold his 395 sq ft flat at City One for HK$2.28 million - nearly 12 per cent lower than his original asking price of HK$2.59 million.

 

"It's getting more obvious that investors want to get rid of their properties as they worry that the government may launch more measures to curb soaring prices in the policy address in October," Century 21's Sha Tin regional manager Jessica Chow Suk-ping said.

 

"They want to realise their gains first, and then watch the market before they make their next move."

 

Last month, the government cut the maximum amount that banks could advance on a mortgage loan for homes valued above HK$10 million by 10 percentage points to 50 per cent of the property's value. For properties priced from HK$7 million to HK$10 million, the maximum loan-to-value ratio was lowered to 60 per cent from 70 per cent. Tougher mortgage restrictions were also imposed on non-resident borrowers.

 

Chow said the latest round of cooling measures had a stronger impact on sentiment than the previous round of measures in November, when the government introduced the additional stamp duty of up to 15 per cent on homes resold quickly.

 

"Last time, only one in 10 flat owners was willing to lower their asking price," she said. "But this time, half of them are cutting prices and they think flat prices may have already peaked. On the buyer's side, they want to bargain for the lowest price possible and about 90 per cent of them are end users."

 

Gary Lam Lung-nam, a senior district sales manager at Centaline Property Agency's North Point branch, said investors were stunned by the government's determination to curb price surges.

 

"At least 30 to 40 per cent of owners are taking the initiative to lower their asking prices by about 3 per cent at the beginning," he said. "But they are then willing to reduce prices further by as much as 7 to 10 per cent if buyers are willing to pay deposits by cheque because there aren't a lot of buyers in the market."

 

Lam said sellers with properties priced between HK$9 million and HK$11 million were most affected by the latest mortgage rules. For example, a client had cut the price of his 1,048 sq ft flat in North Point's City Garden by 8.8 per cent or HK$920,000. It eventually sold for HK$9.58 million.

 

With buyers and sellers retreating from the market, Ricacorp Properties said that from June 27 to July 3, there were only 146 secondary market flat sales in the 50 largest housing estates in Hong Kong it monitored. That was down 3 per cent on the 151 transactions of the previous week. That was the lowest figure since November 2005 after taking out Lunar New Year periods when the market is quieter.

 

Eight housing estates recorded no transactions during the week. They include Kornhill, Residence Oasis, Island Harbourview, Park Avenue, and Villa Esplanada.

 

Ricacorp director David Chan said although more sellers were cutting prices, buyers remained conservative. He said that since the market lacked clear drivers transaction volumes were likely to remain low this week.

 

/see: http://hongkong.asiaxpat.com/forums/hong-kong-property/threads/114098/hong-kong-property-prices/

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Three luxury units unsold as caution grips punters

 

Karen Ha .. Thursday, July 07, 2011

 

Bidders turned cautious at an auction of luxury flats yesterday as the government's property curbs have started to bite.

Of the 10 flats that went under the hammer, three of them - two at Baguio Villa and one at Beverly Hills - were withdrawn after failing to win any bids.

 

Base price of the 10 flats ranged from HK$19 million to HK$21.3 million. The seven units that were sold managed to fetch a price that was 2 to 4 percent above the first bid.

 

"The bidders today were very cautious, partly because many are end users and some were first-timers at auctions," said Midland Surveyors director Alvin Lam Tsz-pun.

 

The auction lasted about three hours. A 2,330-square-foot unit at Baguio Villa in the southern district of Hong Kong Island - the first unit under the hammer - took about 10 minutes to receive five bids before it was sold for HK$24.8 million, or HK$10644 per sq ft, only 4.2 percent higher from the first bid.

 

Another flat at Baguio Villa took 20 minutes to draw four bids from the same person before the price exceeded the owner's reserve price. The 2,330 sq ft unit was sold for HK$24.7 million, or HK$10,601 psf.

 

A 1,707 sq ft flat on Mount Davis Road in Kennedy Town was sold for HK$29.7 million, or HK$17,399 psf, after going through 20 bids in more than 30 minutes.

 

The successful bidder, Sunil Nanda, said property prices in Hong Kong were skyrocketing.

 

"I do feel the market is high and there is limited upside in the near term. Property values both residential and commercial are far too high and not enough is being done by the administration to cool the market," Nanda said.

 

He added that the government should increase the land supply as a further cooling measure.

 

The seven units sold generated a total of HK$198.5 million.

 

/see: The Standard

http://www.thestandard.com.hk/news_detail.asp?we_cat=2&art_id=112844&sid=32960071&con_type=1&d_str=20110707&fc=7

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... some negative articles in the press recently ...

 

(1)

A rare bust in HK's property market boom

 

Following the government's recent measures to curb speculation, an investor is poised to lose over HK$2.5m, driving fears of a wider downturn

Peggy Sito and Sandy Li .. Jul 19, 2011

 

Hong Kong's property market is booming, yet a property investor has managed to make a rare loss, following the government's crackdown on the home loans market in June. ...

 

Lime Habitat investor who bought from SHKP in June 2009 for $25.38 mn, sold for a loss of $2.5 mn (ie $23.88mn) taking into account stamp tax and the agents commission.

(This was a 1,493 sf flat in North Point development.)

 

Amongst 15 resales, this was the first loss-making sale in Lime Habitat, a yet uncompleted development where 168 flats sold in June 2009 at an average price of $9,000. (Note how far the loss-making flat was ABOVE the average. $25.38 million / 1493 = $16,999 psf. Highend buyers cannot afford to be so reckless, and pay 88.8% over the average.)

 

 

(2)

Investors steering clear of property

 

Confidence among investors in Hong Kong housing drops 58pc, more than any other asset class, as soaring values price people out of the market

Charlotte So .. Jul 19, 2011

 

People are losing confidence in the Hong Kong property market after a rally that has enriched many investors but also made homes less affordable for average earners. ...

 

+ In Friends Provident survey - confidence in property fell more than other asset classes, from 12 points to 7 points on a scale of minus 100 to plus 100

 

+ Confidence in other assets fell too, but not as much

 

Flats in HK cost 11.4 times average annual income, compared with 5-6 times in London.

(But the article does not mention that HK investors pay less in tax, and "waste" less money on transport expenses.)

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Did you see this?

http://www.thestandard.com.hk/news_detail.asp?pp_cat=1&art_id=112659&sid=32886999&con_type=1

 

Surprise 58 from Imperial Cullinan

 

Karen Ha / June 30, 2011

 

In a surprise move, Sun Hung Kai Properties (0016) yesterday put another 58 flats at Imperial Cullinan on the market, pricing them much lower than the first batch.

But it was not poor sales that prompted the step from the developer.

 

"Almost [all] 73 flats of the first batch were sold on the first day of sale [yesterday]," Sun Hung Kai Real Estate Agency executive director Victor Lui Ting said.

 

"We have priced the newer flats lower because most of their views are not as nice as those in the first batch."

 

The newly available flats go on sale on Saturday at an average price of HK$15,982 per square foot - 14 percent lower than the first batch at HK$18,688 psf.

 

The price range is closer to nearby flats in the secondary market. The neighboring One Silver Sea project is priced around HK$15,000 to HK$16,000 psf.

 

Sales yesterday at Imperial Cullinan, atop Olympic MTR station, included a 2,523 square foot special unit bought by a mainlander for HK$108 million, or HK$42,806 psf.

 

- and this promotional event ?

 

 

- this is about the property itself

 

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Did you see this?

http://www.thestandard.com.hk/news_detail.asp?pp_cat=1&art_id=112659&sid=32886999&con_type=1

 

Surprise 58 from Imperial Cullinan

 

Karen Ha / June 30, 2011

 

In a surprise move, Sun Hung Kai Properties (0016) yesterday put another 58 flats at Imperial Cullinan on the market, pricing them much lower than the first batch.

But it was not poor sales that prompted the step from the developer.

 

"Almost [all] 73 flats of the first batch were sold on the first day of sale [yesterday]," Sun Hung Kai Real Estate Agency executive director Victor Lui Ting said.

 

"We have priced the newer flats lower because most of their views are not as nice as those in the first batch."

 

The newly available flats go on sale on Saturday at an average price of HK$15,982 per square foot - 14 percent lower than the first batch at HK$18,688 psf.

 

The price range is closer to nearby flats in the secondary market. The neighboring One Silver Sea project is priced around HK$15,000 to HK$16,000 psf.

Thanks.

Lower prices were needed - an the average flat at OSS has a better view than the average flat at IC, and that is especially true for the "inside" Towers. Only Tower 1 and Tower 8 at IC have good views.

 

MAP

TLB50-map.jpg

 

SHKP has been using the usual developer trick of "talking up prices" before launch, and then launching at 10-15% less than "expected". I thought the talk of "$20,000 and higher" for Imperial Cullinan was ridiculous, when you can get very nice flats in The Long Beach for $10,000-12,000 psf. LB features a grand and more spacious clubhouse and residents' outdoor park, which in terms of everyday usability is miles better than the cramped affair at Imperial Cullinan, which I think is "over-branded."

 

Here's an earlier article from the original launch of IC:

 

W Kowloon luxury flats test price ceiling

 

Karen Ha .. Monday, June 27, 2011

 

Flats at a new luxury project in West Kowloon have been priced lower than expected - setting the market abuzz with talk that a price ceiling is in sight.

This follows new government measures to curb property prices earlier this month.

 

Sun Hung Kai Properties (0016) will price the first 60 flats at Imperial Cullinan 15 percent lower than hinted last week.

 

This is the first major luxury project to go on the market since cooling measures were announced.

 

The first flats have been priced at an average HK$18,688 per square foot, as against HK$20,000 to HK$25,000 psf the developer hinted at a week ago.

 

The flats range from 1,583 sq ft to 1,848 sq ft, and are priced between HK$26.07 million and HK$44.48 million.

 

Last night SHKP put another 13 flats on the market. Twelve are between 1,848 sq ft and 1,860 sq ft, and are priced from HK$40.97 million to HK$46.68 million.

 

Another specialty flat, measuring 2,523 sq ft, is priced at HK$108 million, or HK$42,806 psf.

 

Sales of 73 flats will start on Wednesday and are expected to generate more than HK$2 billion for the developer.

 

"We usually offer the first batch of buyers a lower price," said Victor Lui Ting, executive director of Sun Hung Kai Real Estate Agency.

 

Imperial Cullinan comprises 650 flats above the Olympic MTR station. Neighboring flats on the secondary market, such as those at One Silver Sea, are priced around HK$14,500 psf.

 

Flats at The Cullinan - one of several luxury developments above Kowloon

 

MTR, which Sun Hung Kai said it would use as a reference for Imperial Cullinan - are selling for HK$24,398 psf on average.

 

Ricky Poon Wai-ki, executive director of residential sales at Colliers International, said of the HK$18,688 psf average: "It is a rather conservative pricing.

 

"With a price that is so close to the secondary flats in the neighborhoods, the developer could be switching from their initial targeted group of mainlanders to local homeowners who are seeking to upgrade."

 

But Eddie Hui Chi-man, deputy director of the Research Centre for Construction and Real Estate Economics at Hong Kong Polytechnic University, said it is too early to tell whether it indicates a softening of prices.

 

"Selling the flats lower than expected could be one of the tactics the developer uses to attract buyers," he said. "If the developer prices subsequent flats even lower, then that could be a sign.

 

/source: http://www.thestandard.com.hk/news_detail.asp?pp_cat=30&art_id=112518&sid=32853727&con_type=3

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... some negative articles in the press recently ...

(1)

A rare bust in HK's property market boom

(2)

Investors steering clear of property

Confidence among investors in Hong Kong housing drops 58pc, more than any other asset class, as soaring values price people out of the market

Charlotte So .. Jul 19, 2011

The next day's SCMP article was much less negative

 

(3)

RISE in home sales continues

Market sentiment shows signs of improving, but many analysts expect it to hover around the present level for some time

 

Home sales continue rebounding from a near six-year low a fortnight ago, as property market sentiment showed some signs of improving.

 

Ricacorp: "We are seeing buyers recover their confidence."

 

======= : secondhand sales

July 11-17 : 195 homes, in 50 estates

July 03-10 : 153 homes

previous - : 146 homes

 

NT : up 50% from 73 to 114.

Kowloon +4% from 56 to 58.

Island down from 24 to 23.

 

New homes: 62 sold, up from 57.

(65% of which were Imperial Cullinan.)

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Housing sales hit by falling stock market

 

"Housing sales in the secondary market dropped 23 per cent on the weekend as market sentiment was hit by tumbling stock prices around the globe and the announcement that the United States had lost its top-tier AAA credit rating from Standard&Poor's for the first time."

 

Hang Seng Index / HK1804580 ... Update: http://tinyurl.com/HSI610d

xx

 

"A total of 24 transactions were recorded at 10 major estates on Saturday and yesterday, down 23 percent from the previous week, according to estate agency Midland Realty.

 

Although there were no signs so far of panic selling, agents said owners had cut asking prices by as much as 13 per cent."

 

The article goes on to talk about:

 

+ An owner of a 1,029 sf flat at Taikoo Shing selling his flat for HK$10.4 million, or HK$10,107 per sf*, down from the original asking price of HK$12 million

 

+ Tomorrow's auction of a large luxury site at Sha Tin should be a good indicator of (builders') market sentiment - Expected price is HK$7- 9 billion.

 

== == ==

 

*I note that: the average selling price, as reported by Centaline was $9,855.94 psf : index : chart

(the old asking price seems far too high, so the reported "price drop" now looks exaggerated)

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