New home sales crash to 16-month low at $11.2b in October

The dismal take-up comes after banks hiked lending rates.

Bloomberg reports that the transaction value in Hong Kong’s new-home sales market has plunged to $11.2b in October YTD which marks the lowest level in 16 months once holiday distortions are taken out of the picture, another sign of decline in the once heated property market. 

The number of transactions fell to 1,130, down by almost half from the total for all of September home sales, data from Midland Realty show.

Also read: Property sales crash 28% in September

The sales figures are the first since banks across the city ended a decade of cheap money after raising their best lending rates by 25 basis points from 2.25% to 2.5%. The low and stable borrowing costs have fuelled Hong Kong's red-hot property market to the distinction as the world's most expensive property market after home prices ballooned more than 170% in the past ten years, data from Bloomberg show. 

Also read: Hong Kong home price war heats up as developers rush to unload stock

Buyer sentiment has also been hit as affordability concerns grow, Nicole Wong, regional head of property research at brokerage CLSA Ltd. told Bloomberg.

“The developers tried the tactics of pricing it low, it has worked for a while, but it’s no longer working,” Wong said. “Buyers now have to rethink that the cheaper prices are not cheap at all.”

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