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RESIDENTIAL PROPERTY | Staff Reporter, Hong Kong
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Home sales hit near-seven-year high in Q2

There were 10,128 sales and purchase agreements in April alone.

Hong Kong’s property market is zooming back into recovery as total residential sales in Q2 2019 reached the highest level since Q4 2012 as gains from Q1 2019 extended into the following quarter, a report by Cushman & Wakefield revealed.

The number of sale and purchase agreements (S&Ps) climbed 53% MoM to 10,128 in April - the first time to hit above the 10,000 level in 76 months' time. Similarly, residential sales in terms of residential S&Ps reached 7,822 and 8,208 in April and May, respectively, surpassing the 8,000 mark for the first time since October 2012.

Also read: Home sales hit 7-year high in May

These two months alone are said to represent a YoY growth in residential sales by 32%, and up 86% from combined sales of the first two months in Q1, serving as evidence of the hot sentiment carrying into Q2 2019.

According to Alva To, Cushman & Wakefield's VP and head of consulting for Greater China, the positive market sentiment was supported by solid pent-up demand and confidence in a positive market outlook, in the face of the steady development of the China-U.S. trade talks during February and March.

“However, since an escalation in tensions arising from new tariff threats in May sent jitters across global stock markets, plus a change in sentiment due to local political issues, we expect home sales will be down to an estimated 4,500 S&Ps for June, bringing about 8.7% growth YoY in Q2 overall."

Meanwhile, home prices have been climbing for five consecutive months since January. Government figures showed that the residential property prices grew by 3.2% MoM in the fastest pace of growth in more than six years. Cushman & Wakefield estimates at least another 3% growth for May and flat expansionfor June, leading to an accumulated growth of 12.6% within the first six months of the year.

Also read: Hong Kong's property prices hit all-time high

In terms of actual prices, by mid-June, some popular mass residential estates have recorded growth in prices of over 20% YTD, whilst prices in selected luxury properties have witnessed growth of 10% in the same period. 

“Prices at City One Shatin and Taikoo Shing, for example, have experienced YTD growth of 26.3% and 20.2%, respectively, surpassing their last peaks in August 2018 by 1%. Prices for luxury residential represented by Residence Bel-Air and The Habourside still lag behind but are already within 2% of their last peaks,” To noted.

Hong Kong’s property investment market in Q2 improved marginally compared with Q1, but the sentiment remained subdued in general. The number of major deals (each with a consideration of over $100m) climbed 27% QoQ to 66, with a total consideration of $34.4b that was close to 2.5 times the consideration of Q1

Also read: Is Hong Kong's residential market bottoming out?

Cushman & Wakefield also noted that the drop in the share of luxury residential transactions from 71% to 44% was met with an increase in share for office (en-bloc and strata-title combined) transactions from 8% to 35%. 

In terms of consideration, the many strata-title office transactions driven by The Center, as well as en-bloc office sales such as 625 King's Road and 69 Jervois Street, drove the growth in consideration over Q1.

“Given mainland investors' traditional preference for buying luxury residential properties in Hong Kong, and in the face of global uncertainties which dampened investment sentiment, this has led to a drop in major transactions of luxury residential,” Tom Ko, Cushman & Wakefield's executive director for Capital Markets in Hong Kong, said.

"On the other hand, institutional funds remained active in big-ticket transactions and kept looking for opportunities in the office sector. We expect when there is further progress in the China-U.S. trade talks, the uncertainties affecting the market will clear up further and give a boost to the performance of the property investment market in the second half of 2019."

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