Housing sentiment strong in primary market despite fall in CCL home price index

Something's up with the housing market.

Something strange is going on in the housing market, it has been noted.

According to a research note from Barclays, in the primary market, housing sentiment appears to be strong with homebuyers snapping up 401 units at the Beaumont II in Tseung Kwan O.

On the other hand, the CCL home price index has just fallen for the third straight week and the 2.2% w/w correction in the luxury market appears to run counter to recent headlines which had suggested the positive wealth effect benefiting the top end of the market.

Although this may only be a blip on the radar, Barclays notes this recent trend is worth monitoring.

Here's more from Barclays:

Home prices continue the third week of recording loss, declining by 0.7% w/w and 0.8% in the last three weeks. At a reading of 140.33, the year to date gain is now reduced to 5.9% from the peak of 7.5% on 5 April.

Out of the six sub-indices, four of them recorded a loss this week. Large units recorded a particularly sharp fall of 2.2% w/w, while small/medium units also recorded a 0.4% w/w loss. Split by district, the urban area also led the fall, as both Hong Kong Island and Kowloon recorded 0.9% loss w/w. Alternatively, New Territories East and West gained by 0.4% and 0.5% w/w each.

Primary volume over the weekend was 50 units. In addition to this, CKH also sold out all of the 401 Beaumount units offered on Friday. There were also two ultra-luxury transactions during the week, which were one unit from Opus at HK$369mn and one house from Scape at HK$450mn respectively.

Of the 50 units sold during the weekend, 17 units were sold from the Reach, 6 units from My Place, 6 units from various phases of Providence Bay and Mayfair by the Sea and 21 units from other projects. As CKH has now sold out all the 401 three-bedroom units in Beaumount, it has swiftly released the price of all the remaining 471 two-bedroom units.

Compared to the HK$9,328psf net effective price for three-bedroom units, Beaumount has raised the price for two-bedroom units by as much as 15.5% as the net effective price for them is HK$10,772psf. In terms of launch progress for other projects, SHKP may make available the show flat of the 256-unit Ultima this week. Paliburg-Regal has also started compiling subscription tickets for the 134-unit Domus.

The small Yuen Long project is priced with an expensive average price per square foot but with a small lump sum given that the units can be as small as 219sf only. At a net effective ASP of HK$11,024psf, it is 28-54% more expensive than Woodsville (HK$8,618psf) and Uptown (HK$7,148psf).

Centaline recorded 16 transactions from its Top 10 Housing Estates during the weekend, which was the same compared to the 16 transactions it recorded during the preceding three-day Buddha birthday weekend. Kingswood Villas, Mei Foo Sun Cheun and City One each recorded four, three and three transactions each.

By the broader measure of Midland’s 35 housing estates for the whole week, it recorded 78 transactions for the week of 18-24 May, which was down 20% and also 10% lower than the 2014 weekly average of 87 transactions.