Hong Kong Home August Sales Hit 14-Month High as Mood Lifts

  • 5,821 units sold in month compared with 4,243 in July
  • Sales value of HK$40.6 billion vs July’s HK$29.7 billion

Hong Kong home sales rose to the highest level in at least 14 months as property developers sold more new units and sentiment improved in response to stabilizing prices.

The number of home sales reached 5,821 in August, with a value of HK$40.6 billion ($5.2 billion), according to a release on the Hong Kong Land Registry’s website on Friday. That’s up from 4,243 units changing hands in July, with a value of HK$29.7 billion.

Demand from buyers has slowly recovered since home sales fell to a 25-year low of 1,807 units in February, spurred by aggressive discounts of up to 18 percent offered by Hong Kong developers. They are also providing mortgages worth as much as 120 percent of a property’s value.

While there has been a pickup in the number of sales, the average size of transactions has fallen as developers sell smaller units compared with a couple of years ago, said Alfred Lau, an analyst at Bocom International Holdings Co. "Developers are focusing more on volumes than margins," Lau said.

Prices reached their low at the end of March, more than 13 percent below their peak last September. The recent recovery has left them 9.4 percent below the September high, according to data from Centaline Property Agency Ltd., which tracks secondary sales.

Hong Kong home prices will fall a further 10 percent as a pipeline of new developments is met by stalling income growth and looming interest rate hikes, Nomura Holdings Inc. said in a report on Tuesday. Mortgage rates in Hong Kong, which are linked to the Federal Reserve rate via the pegged currency, may rise after Fed Chair Janet Yellen said last week the case to raise U.S. interest rates is getting stronger.

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