Hong Kong’s avid homebuyers stayed on the sidelines for the first big sale of flats on Thursday after the government relaxed social distancing measures, reluctant to spend on big ticket items as the economy shows no signs of emerging from a recession that has stretched into four quarters.
As of 6pm, mainland developers Longfor Group and KWG Property managed to sell just one out of 123 flats at the Upper River Bank project in East Kowloon, close to the former Kai Tak airport, agents said, adding that they could possibly sell another unit before they close for the day.
This was the eighth batch of flats on sale since the project was launched in September last year, with prices ranging from HK$13 million (US$1.67 million) to HK$28 million after discounts. The developers plans to soon offer another batch of 52 units for tender. Before today, they had sold 352 of the 667 units in the development, collecting HK$5.1 billion in receipts.
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“We will not see homes over HK$10 million selling fast at this moment,” said Sammy Po Siu-ming, chief executive of the residential division at Midland Realty.
He said that potential buyers of such homes either purchase for investment purposes or for changing homes, but they were now taking a wait-and-see approach and will only enter the market if the developers offer big discounts. “There is no demand from first-time homebuyers,” Po added.
Hong Kong’s economy contracted 9 per cent in the April to June period, falling for the fourth straight quarter. With headwinds from the coronavirus pandemic buffeting the economy, the city’s gross domestic product is forecast to shrink between 6 and 8 per cent this year. While the city’s tourism sector has ground to a halt, retail sales have fared no better. Last month retail sales in the city fell 23.1 per cent year on year for the 18th month in a row.
A government report today showed a measure of unemployment in the city has reached a 17-year high.
The ripple effect of these developments have been felt by the city’s property market, with transactions falling to a four-month low last month. Overall transaction volume, including homes, commercial and industrial properties and car parking spaces, sank 34.2 per cent month on month in August to HK$45.59 billion, according to Land Registry data released last week. It was the lowest since the HK$38.35 billion worth of deals in April.
The third wave of Covid-19 infections in July “suddenly clouded the market” outlook, said Derek Chan, head of research at Ricacorp Properties. “Buyers became more cautious so owners were willing to offer more discounts and price cuts.”
Prices of lived-in homes in July weakened 0.5 per cent from June, the fastest pace in five months, according to an index published by the Rating and Valuation Department.
As Hong Kong’s daily new Covid-19 infection cases in the third wave has ebbed in recent weeks, the government has relaxed measures. After doubling the number of people to four per table in restaurants last week, the government has said bars, karaoke lounges, swimming pools and other public venues could reopen from this Friday onwards.
Midland’s Po said the easing of social distancing restrictions should have a positive impact on the property market. “Hopefully we can see the market become brisk again as the third wave has come under control,” he said.
More from South China Morning Post:
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This article Hong Kong homebuyers give midweek property sales a miss amid unemployment, economic worries first appeared on South China Morning Post