Sales at Hong Kong’s biggest private residential projects fell to a fewer than 10 for a second straight weekend after the developer controlled by the city’s richest man said it would cut prices of new units in response to a doubling of the stamp duty.
Six existing units were sold over the past two days at the city’s top 15 private home estates, including Tai Koo Shing and Mei Foo Sun Chuen, compared with nine transactions a week earlier, according to data compiled by Midland Holdings Ltd., Hong Kong’s biggest publicly listed realtor. Cheung Kong Holdings Ltd., controlled by Li Ka-shing, will cut prices by as much as 11 percent, it said last week.
“The market lacks any sort of upward momentum,” said Vincent Chan, an executive director at Midland. “The impact of the measures is obvious on the second-hand market. At the same time, there are developers rushing to sell new apartments and that’s taking away potential buyers as well.”
Hong Kong on Feb. 22 doubled the stamp duty tax on all properties of more than HK$2 million ($258,000) and raised mortgage down-payment requirements on some homes, the fourth round of major real estate curbs since Chief Executive Leung Chun-ying took office in July.
Home prices have doubled in the past four years on record low mortgage rates, a lack of new supply and an influx of mainland Chinese buyers, raising concerns that housing is becoming unaffordable for the general public. Chief Executive Leung has made available more land for public housing and imposed extra tax on foreign homebuyers since July.
Cheung Kong will cut prices at the One West Kowloon project by 11 percent and raise its overall home sales target by 10 percent for 2013, Executive Director Justin Chiu said last week.
The city’s biggest builder by value behind Sun Hung Kai Properties Ltd. targets to sell more than 5,200 units for a record HK$30 billion this year, Chiu told reporters on March 6.
“Cheung Kong is serious about raising its market share and we believe their products are more favorable in a down market,” said David Ng, a Hong Kong-based analyst at Macquarie Securities Ltd., who expects home prices to drop 10 percent in 2013.
Cheung Kong sold more than 3,300 residential units worth HK$26 billion in 2013, both the highest among Hong Kong developers, according to data compiled by Centaline Property Agency Ltd., the city’s biggest closely held realtor.
Sun Hung Kai on Feb. 28 cut its target for the fiscal year ending June by 8.6 percent to HK$32 billion. New World Development Co., controlled by billionaire Cheng Yu-tung, lowered its sales target in response to the government curbs.
Cheung Kong’s shares rose 1 percent to HK$120 as of 9:54 a.m. in Hong Kong today, while Sun Hung Kai was unchanged at HK$114.90. The Hang Seng Property Index, which tracks nine of Hong Kong’s biggest builders, has gained 17 percent in the past year, compared with the 10 percent gain in the Hang Seng Index.