The additional supply will not drag down home prices.
Residential sales plunged 42.4% month on month to only 3,515 in July 2017. Primary sales fell about 60% to 952 transactions, as fewer new flats were launched. However, Knight Frank said home prices continued to trend upwards. Official data show that they continued to climb for 15 consecutive months ended June 2017, rising 23.8%. The mass sector led with 24.3% growth, while luxury home prices gained 14.8% during the period.
Here's more from Knight Frank:
In the luxury segment, home sales worth HK$10 million or above plunged 48.6% to 710 last month. However, a number of enquires were received from Chinese Mainlanders, reflecting their continued interests in Hong Kong properties, particularly primary homes in emerging luxury areas, where transportation is more convenient than in traditional luxury districts.
On the leasing front, the market continued to see robust activity during the peak season before the start of the new school year. Some record-breaking transactions were recorded. For example, a house in The Beverly Hills in Tai Po was rented for HK$30.6 per sq ft per month, a five-year high in the development.
The US Federal Reserve decided to keep the interest rate unchanged in July, and another interest-rate hike is generally not expected during the remainder of the year. Hong Kong’s supply of new private flats will climb to a high of 98,000 units over the next three to four years, according to The Transport and Housing Bureau, but this additional supply is unlikely to drag down home prices. We expect residential prices to grow 2-5% during the second half of 2017, led mainly by the mass sector.
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