Homebuyers Getting Cold Feet in Hong Kong’s Property Market

There is a lot of uncertainty surrounding the Hong Kong apartment for rent and sale market. Many people are pulling out of deals that were concluded months ago owing to the growing uncertainty in the sector. For a long time, the Hong Kong property market had been experiencing rapid growth and proved to be a worthwhile investment to many people. However, things now seem to be heading in a completely different direction. Here are the statistics of the changes in the property market and predictions of how things are bound to be in the next few months;

What the Numbers Say

Statistics show that many people are willing to forfeit their money by cancelling contracts they entered into because of the dwindling real property market in Hong Kong. One buyer forfeited a 5% deposit on a property that is being developed by Sun Hung Kai in St Martin II. The buyer was willing to give up a whopping HK$ 362, 700, or US$ 46,200, just to get out of the deal.

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This move was followed by five more buyers pulling out of deals in Park Yoho Milano. The Hong Kong apartment for rent was also being developed by Sun Hung Kai. It is estimated that the reversals cost the buyers a total of a solid $ 2 million. This particular block of flats was seen as the cheapest project of the year, although buyers don’t seem convinced that they will rake in a lot of profits from investing in it.

In yet another astounding move, a buyer cancelled a HK$ 2 million on a Hong Kong apartment for rent at Harbor place. The buyer had earlier signed a contract in April where he promised to buy a 589-square foot flat. In July, he changed his mind and pulled out of the deal. This is without doubt one of the best examples of just how far reaching the effects of the decline in the property market are.

Just this year, 1740 home sale contracts were signed in July, a figure that is 15% less than that of June. By 14th August, only 711 such deals had been concluded. In July, contracts concluded for lived- in homes were 4, 040, which is a 7% decline from June. In August, a mere 1300 contracts have been concluded so far.

What is Causing the Decline?

There are a number of factors that have contributed to the current property market situation in Hong Kong. For one, the higher mortgage rates have not done much to encourage people to buy flats. The US- China trade war as well as the stock market struggles is certainly not doing the market any good. Moreover, the fact that the Hong Kong government has laid down rules to lower the price of real property certainly isn’t appealing to investors.

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Buyers are expecting the flats to get cheaper with time. This is indeed a prophecy that will come to pass since big companies such as Sun Hung Kai have already started lowering their prices by up to 10%. This is expected to be the trend. The unreasonably high buying prices that have been experienced in previous years are expected to keep reducing for the next one year.

Hong Kong Apartment for Rent

The insecurity surrounding the property market in Hong Kong is undoubtedly causing a lot of harm. Experts expect the current trend to continue until the end of next year. UBS expects prices to nose-dive by 10% up to the end of 2019, while Citibank expects a 7% decline in the second half of the year.