Hong Kong property agencies Centaline, Midland forecast property sales hitting 10-month high in March

Midland Realty and Centaline Property Agency, two of Hong Kong’s largest real estate agencies, said the total number of transactions could have breached the 5,000 deals mark last month, the highest level since May last year, when sales of new and second-hand homes, parking spots, shops, offices and industrial units reached 5,284 deals. Official sales data is set to be released this week.

A total of 3,189 property transactions worth about HK$22.6 billion (US$2.9 billion) were recorded in February, government data shows. Sales in March are tipped to amount to about HK$37.3 billion, the highest level since June’s HK$39.7 billion worth of deals.

“After the government withdrew the property curbs, the property market sentiment improved rapidly and transaction volumes increased,” said Roen Yeung, a senior associate director in Centaline’s research department.

Among the measures scrapped by Financial Secretary Paul Chan Mo-po in his budget speech on February 28 were the Buyer’s Stamp Duty that targeted non-permanent residents and a New Residential Stamp Duty for second-time purchasers. Homeowners were also no longer required to pay a Special Stamp Duty if they sold their homes within two years.

The decade-old measures were scrapped to boost a struggling property market.

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Mortgage financing was also eased. The Hong Kong Monetary Authority currently allows homes valued at less than HK$30 million to be eligible for 70 per cent mortgage financing, compared with the previous cap of 60 per cent for flats valued between HK$15 million and HK$30 million.

Centaline said new home sales could have hit 1,488 units valued at HK$13.72 billion in March, more than four times the 357 units sold in February and more than double their value of HK$5.63 billion. As for secondary homes, they might have improved by 23.2 per cent and 21.9 per cent to 2,290 units valued at HK$15.63 billion, respectively.

The agency has estimated that a total of 5,010 deals were completed in March, while Midland has forecast that 5,004 property transactions took place. And this improved performance is likely to continue, with property sales forecast to reach 9,300 units in April, a 33-month high, according to Centaline.

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Ricacorp Properties, another property agency, has forecast that 9,160 property transactions will be recorded in April.

“With developers actively launching new projects and late-stage projects throughout March, the registration of property transactions will have been fully reflected starting mid-March, so we expect more sales in April,” said Derek Chan, Ricacorp’s head of research.

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However, given that interest rates remain at more than a two-decade high, property consultancy JLL still believes that a short-term rebound in property prices is unlikely.

“I am pretty sure the property transactions this year will be impressive because developers are keen to dispose of their unsold stock and they’re offering attractive deals, but this means that in the secondary market, homeowners will have to sell at an even bigger discount and not many are willing to do that,” said Cathie Chung, senior director of research at JLL in Hong Kong.

Historical analysis suggests that home price stabilisation will require monthly secondary residential transaction volumes to stand firmly above 3,500 units, JLL said.