Only a few months ago, Hong Kong was among the top market in real estate.
Now the bubble is slowly deflating and has become an outcry to the investors. In just two months, over August and September, buyers weren’t queuing as much as they did before. Even bidders are running short for foreclosed properties. This is not the end of it all, next year, prices for these will go down even more to as much 10-15%.
Over the weekend, Hong Kong reached its worst sales of a home. Chinachem Group only sold 4 out of 144 units. Even with a rise of a 6.5% discount, there was still not enough buyers for residential properties. They also offered a more relaxed mortgage scheme and rules to the market. Buying in cash gives another 1.5% discount. Crescent Green sold 29 out of 67 on Friday. All this is because of the intensifying protests going around the city.
Hong Kong – People not in the mood to purchase?
According to Sammy Po, most of these investors aren’t in the mood to buy these properties because of safety, traffic, and other concerns that have been dragging along for quite some time.
“The unpredictable social events have intensified in the past few days, affecting apartment visits for potential buyers. Buyers have turned more cautious,” he added Chief Executive Lam Cheng Yuet commented that they have made a lax lending rule for first-time buyers so they could start to step up owning one of the most expensive properties to hold in the world.
The easing of the mortgage may have encouraged some buyers to buy used homes.
This Sunday has been one of the worst ones between the protesters and the police. Petrol bombs where being tossed by the demonstrators, and police responded with teargas and blue-dyed liquid sprays. This clash paralyzed the city most of the days last week, and public transportation was affected.
Kenneth Yau, a senior sales director at Midland Shops, said that prices of shops in less prime locations would be one of the most affected. The rents will plummet. Buyers are asking for 40% from the original asking price. Although sellers were cutting down their costs, it was still hard for them to entice buyers.
Dennis Cheng, senior sales director at Ricacorp Properties, predicted that November will be the deepest plummet for them since they started in 1995.
During one of Hong Kong’s worse tragedies, the SARS outbreak, shops got an average of 200 per month. Now, transactions were as low as 4 in November as compared to 24 in October and 82 before that.
On Friday, these protests disrupted not only the traffic but also the train services forcing schools and some businesses to close early. However, the government provided ferry services to residents for free. Residents who couldn’t travel were willing to pay $100 just to be able to travel by small boats. The highway was again reopened on Saturday.
Having a population of 7.4 million, this makes up to 2.5 million households, and 800,000 are rented by the government.