Home sales down 9% to 6,093 units in July

Buyers held back purchases to see the impact of new housing policies.

Hong Kong’s home sales lost momentum in July after falling 9% MoM to 6,093 sold units, according to real estate consultant Knight Frank.

Landlords and potential buyers lie in wait to see the full market impact of the government’s new housing policies which includes a tax on vacant properties and a revision of the affordability test of the pricing mechanism for the Home Ownership Scheme.

Despite a more subdued market takeup, residential prices extended their steep climb for the 27th straight month albeit at a slower pace after rising by 1.644% in June, according to data from the Rating and Valuation department.

Also read: Vacancy tax may not dampen Hong Kong's runaway home prices

This translates to prices of flats measuring less than 430 square feet inched 1.58% whilst units of 1,722 sq ft or more edged up 1.27%.

The primary market segment continued to take charge of the residential market as secondary sales market volume plunged 40% WoW in the week ending August 19, according to UOB Kay Hian, adding that the trend is expected to continue to for the second half of 2018 amidst a strong primary market pipeline. 

“In light of the government intervention and external uncertainties, we expect home prices to grow at a slower rate in the second half of the year. Over the whole year though, residential prices are expected to increase between 10-13%,” added Knight Frank.

Also read: Hong Kong's property market shows signs of cooling down

In fact, a Yau Tong site at Ko Chiu Road which was sold to Poly Group for $3.3b under the government’s land sale programme, marks the first plot in Kowloon to be sold at less than $10,000 psf in two years, added UOBKH analyst Shaun Tan. “Home prices appear to be flattening out as growth has been staggering in recent weeks,” added Tan.