A stunning reversal across various global real estate hubs which have served as focal points for both international investors and criminal oligarchs, has made itself clear over the past several months. I’ve highlighted plunging sales and prices in high-end London, a multi-month slowdown in Manhattan’s luxury market, as well as a burst bubble in mansion prices in various articles over the last several months. We now have another region to add to the list: Hong Kong.
Bloomberg reports:
In a city that saw demand propel property prices to a record last year, the estimate that transactions reached a 25 year-low in Hong Kong shows how quickly sentiment has turned.
Home prices have slumped almost 10 percent since September and monthly sales in January fell to the lowest since at least 1991, according to Centaline Property Agency Ltd. Amid a spike in flexible mortgage rates this month and anemic demand for new developments, the low transactions volume for January is the latest evidence that prices have further to fall.
Talk about a reversal.
Developers are showing caution too, which could further weaken the outlook for the property market. According to Bloomberg Intelligence, two out of three government attempts to sell residential land sites through tenders since November failed after bids failed to match the minimum price.
Housing prices are down 9.5 percent since their September peak, according to the Centaline Property Centa-City Leading Index and may fall another 20 percent in 2016, according to some estimates. Centaline estimates that transactions reached 3,000 units last month. The previous low was 3,786 units in November 2008, according to a Jan. 31 release.
The tepid demand was pronounced in January as buyers traditionally delay making purchases in the lead-up to the Chinese Lunar New Year holiday which begins on Feb. 8. In turn, many developers have delayed the launch of new projects until then. Sales in December were 5,294 units. The drop was particularly sharp in the primary market, with an estimated 420 new units sold last month, down 80 percent from December’s 2,127 units, Centaline said.
In order to encourage buyers, developers have been offering discounts and stamp duty rebates as well as second mortgages allowing borrowers to finance up to 90 percent of a home’s value. Still, they’ve resisted slashing prices.
For previous articles on the trend of weakening real estate prices in global hubs see:
The Luxury Housing Bubble Pops – Overseas Investors Struggle to Sell Overpriced Mansions
Manhattan Luxury Real Estate Peaked Last February – Prices Now Down 8 Months in a Row
Tens of Thousands of Properties to Be “Dumped” on London Real Estate Market by 2017
Luxury London Real Estate Prices Plunge 11.5% Year-Over-Year
Luxury London Home Sales Plunge 26% – Has this Mega Real Estate Bubble Finally Burst?
In Liberty,
Michael Krieger
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