Auction of 2 Kowloon sites may earn $6.25bln

Bidding to test developers' resolve after government has shown its determination to bring property prices down.

Hong Kong’s efforts to cool home prices may damp bidding at a land auction on Tuesday that will test developers’ confidence after the government tightened mortgage rules and pledged to increase supply.

The sale of two plots on the Kowloon Peninsula may raise a combined HK$6.25 billion, according to the median estimate of seven analysts surveyed by Bloomberg News. At least four analysts cut their forecasts after the government announced the measures on Aug. 13.

Property shares fell the most in more than two months on Monday while sales at some of Hong Kong’s largest residential complexes slumped by more than half at the weekend, according to Centaline Property Agency Ltd. Hong Kong has been trying to curb home prices that have surged about 45 percent since the beginning of 2009.

“The market will just have to come down a bit,” said Alnwick Chan, a Hong Kong-based executive director for property broker Knight Frank LLP who lowered his estimates for the Hung Hom site by 7 percent to HK$2.7 billion.“The government’s determination in bringing prices down is manifestly clear. Developers should realize that and it will be reflected in the auction’s bidding.”

View the full story in Bloomberg.