China’s Hong Kong Home-Buying Influx Wanes, Midland Says

China's Hong Kong Home-Buying Influx Wanes, Midland Says
The Hong Kong Jockey Club Happy Valley race course, center right, is surrounded by residential and commercial buildings in Hong Kong, China. Photographer: Jerome Favre/Bloomberg

Mainland Chinese investors accounted for a smaller percentage of Hong Kong’s new home sales for a second quarter as the nation’s banks tightened lending while local buyers returned to the market, Midland Holdings Ltd. said.

Mainland purchasers made up 36.8 percent of all new home sales by value in the first quarter, from 37.9 percent in the previous three months, Hong Kong’s biggest publicly traded realtor said in an e-mail yesterday. The figure reached 53.9 percent in the third quarter last year, Midland said.

China’s gross domestic product expanded 8.1 percent in the first three months of 2012 from a year earlier, the fifth straight quarterly deceleration, as Premier Wen Jiabao cracked down on property speculation and exports were hurt by Europe’s debt crisis. Hong Kong’s home prices have gained almost 80 percent since early 2009 on record low mortgage rates, an undersupply of new units and an influx of Chinese buyers.

“With credit tightening, Chinese homebuyers are having more difficulties borrowing to invest,” said Angela Wong, an executive director at Midland in Hong Kong. “There’s also a huge pent-up demand being released among local Hong Kong buyers, who have waited on the sideline during the previous six months.”

Slower Transactions

Hong Kong home transactions began slowing in the second half of last year, with monthly deals dropping below 5,500 for eight straight months from July 2011, as buyers became concerned over a potential slowdown in the U.S. economy and the European debt crisis, Wong said. Before that, more than 7,000 transactions had been recorded every month since March 2009.

Transactions rose to 11,358 in March before slowing to 8,217 in April, according to Land Registry figures.

The value of new home sales from mainland Chinese buyers was HK$7.9 billion in the first quarter, down from HK$9.3 billion in the previous quarter, Midland said.

The Hang Seng Property Index, which tracks Hong Kong’s seven biggest developers, fell 2.6 percent at the noon trading break today to its lowest in four months.

Savills Plc said Hong Kong is the world’s costliest place to buy an apartment, with prices about 55 percent higher than London, where the property broker is based. Moscow is 7.4 percent more expensive than London and New York is 15 percent cheaper, Savills said.

Leung Chun-ying, who in July will take over as Hong Kong’s new leader, has vowed to increase housing supply to quell public discontent over a widening wealth gap in the world’s most expensive place to buy a home.

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