New-home sales in October fell to its lowest level in 16 months.
Bloomberg reports that the city’s housing market may already be on its steady way down as warning signs continue to signal the downturn of what was once the world’s most expensive market.
Mortgage applications, for one, have plunged 56% to 7,977 as borrowers held back after banks raised mortgage rates across the board in August. New mortgage borrowers will have to shell out an additional $50 per month for every $1m loan for a 30-year tenure.
New-home transactions in October also fell to $11.2b which is the lowest level in 16 months whilst September witnessed the fewest luxury home transactions since 2005. Once the leader in global luxury home price gains, Hong Kong has fallen from grace with annual luxury property growth slowing to 5.5% in Q3 compared to Singapore's robust 13%, data from real estate consultant Knight Frank show.
“We’re now in a correction like the one we had during 2015 to 2016,” Cusson Leung, JPMorgan Chase & Co.’s head of property and conglomerates research in Asia told Bloomberg.
Property agencies, once a coveted profession, have been feeling the brunt of the weakening property market as they turn to layoffs to offset declining sales. Midland Realty has moved to cull the bottom 10 of its underperforming staff, asking the next 55 to take leave without pay and the remaining 35 to have their performance closely monitored.
“The heyday of Hong Kong developers' strong sales margins -- when projects were sold at record-high prices on land acquired at low cost -- could draw to a close in 2019 as the property market shows signs of weakness,” Patrick Wong, analyst at Bloomberg Intelligence said in an earlier report.
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