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Wednesday, May 4, 2016, 23:25

Homes market: Is the worst over yet?

By Oswald Chan
Homes market: Is the worst over yet?
A view of residential properties at Tai Koo Shing on the Hong Kong Island. Local real estate prices are expected to continue their downward spiral up to 2018 as land prices had declined early this year. (Edmond Tang / China Daily)

While housing experts are adamant that Hong Kong’s real estate sector has yet to come out of the woods, latest statistics show that registrations of private homes rebounded to their highest level in nine months in April, suggesting that the city’s property market may have stabilized.

According to Centaline Property Agency, there were 4,494 private residential registrations last month — up a whopping 89.7 percent from March — with cumulative considerations reaching HK$34.5 billion, more than double the figure for March.

April marked the second consecutive month of upticks, with the highest number of registrations since July last year.

Centaline predicts that homes registration will get more vibrant and may hit up to 7,000 cases this month.

“As property prices have fallen in the past six months, potential buyers have taken advantage of the slump to snap up properties for self-use. With homes registrations rising and prices stabilizing, the local market is in a healthy state,” Wong Leung-sing, senior associate director at Centaline Property Agency, told China Daily.

The number of private residential transactions in the first quarter of this year reached 6,221, with a total consideration of HK$44.7 billion — down 62.9 percent and 61.4 percent, respectively, from the same period in 2015 — Land Registry data showed.

Homes market: Is the worst over yet?

Local property prices have slipped nearly 12 percent so far from their peak in September last year, reflecting the negative impact of increased housing supply, US interest-rate hikes, a slowed local economy and the effect of the government’s market cooling measures that have been in place since 2010.

According to the Transport and Housing Bureau, a record 92,000 new private residential apartments will come on stream in the next three to four years, suggesting that further price increases could be constrained.

Developers and property agents have been relentless in calling for the housing curbs to be eased.

“The government should gradually remove some of the cooling measures, such as double stamp duty, and raise the loan-to-value ratios to get the market back to a healthy state,” said Cliff Tse Wai-hung, regional director of valuation advisory services at Jones Lang LaSalle (JLL).

The International Monetary Fund (IMF), however, has struck a cautious tone, backing the existing measures as “appropriate”. The curbs, introduced in November 2010 to curb rampant speculation and skyrocketing homes prices, include heavier stamp duties and tightened loan-to-value ratios for mortgage loans.

“These macro prudential measures have served Hong Kong well and we do not recommend (that the Hong Kong government make) changes,” said Sally Chen, the IMF’s resident representative in Hong Kong.

JLL expects local real estate prices to continue their downward spiral up to 2018 as land prices had declined early this year.

“For new residential projects with higher land acquisition costs, the discounts offered by developers will be limited. The land they acquired at a lower land premium price early this year will be made available for pre-sale as early as 2018, and we expect to see a significant cut in asking prices for their properties,” said Henry Mok, JLL’s capital markets regional director.
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