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| Property News Weekly Digest |
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〈The Standard, Feb.17, 2012〉Lee Shau-kee, the chairman of Henderson Land (0012), says there had been no evidence recently to suggest the residential property market is set for a sustainable rebound.
``The property market as a whole is still not looking good, though some say the market has turned bullish,'' the tycoon known as Uncle Four said at a company function yesterday. ``The market is still average compared with [its] highs. New home transactions are still not high.''
The mainland and SAR governments are providing sites not only for luxury residential properties but also for small and medium-sized flats, he noted, so he does not foresee any shortages in that range in the near term.
Following signs that buying sentiment had improved by last weekend, developers have put more new flats on the market.
Wheelock & Co (0020) had 12 at Lexington Hill in Sai Wan. The units - sized between 785 and 1,004 square feet - are priced at an average HK$12,278 per square foot.
A first batch of 30 flats introduced earlier this week were priced at an average HK$11,039 psf. Sales start tomorrow. At least 80 flats have been reserved, according to a market source, mostly by investors focused on Hong Kong Island.
There are three specialty units that have yet to be launched. The developer has hinted at a price of HK$25,000 psf.
Meanwhile, another bank cut its mortgage rate. ICBC (Asia) trimmed its home-loan rate to prime minus 2.85 percent from prime minus 2.5 percent. The actual new rate will amount to 2.4 percent rather than 2.75 percent.
The lender's HIBOR-based mortgage remains unchanged. The change - effective yesterday - came after Bank of China (Hong Kong) (2388) was said to have slashed its HIBOR-based mortgage rate to 2.14 percent.
〈China Daily,Feb.16, 2012〉With the removal of a policy overhang after Financial Secretary John Tsang reiterated the government’s intention to maintain a stable housing policy in his budget speech on Feb 1, 2012, there have been simultaneous rebounds in both transactions in the secondary home market and property visits by potential buyers after months of lackluster market sentiment.
The latest transactions’ gains were led by lower-valued housing estates such as Kingswood Village in Yuen Long and City One Shatin in Shatin, reflecting an outbreak of pent-up demand especially for small and low-budgeted apartments.
However, overall home prices in the city are expected to move in a narrow range this year after its bull run since 2008 (up 20 percent in 2009, 29 percent in 2010 and 9.3 percent 2011), as the negative factor of weak global economic outlook offsets positive factors of low mortgage interest rates and stable housing policies.
Unlike in the previous two years, the government has not penciled in many changes in its housing policy. The government and related parties will offer an aggregate land supply which can provide around 30,000 private residential flats in 2012-13. Scanning through the Application List in the Land Sale Program, there will be 47 residential sites (of which 24 are new sites) against 2011’s 52 sites, offering around 13,500 flats, compared to 16,000 flats a year ago. But, the annual outcome could fall lower as it will very much depend on the developers’ appetite to acquire land.
Besides, it should be a nice idea to split four larger land sites in Tseung Kwan O, Tuen Mun and Tai Po into eight smaller ones (of which seven will be launched in 2012-13) since more smaller developers will be able to participate in land sales, helping to boost market competition.
〈China Daily,Feb.16, 2012〉Wharf (Holdings) Ltd, a unit of Wheelock and Co Ltd, said on Wednesday it has successfully bid for two pieces of land for a residential development in Beijing in a joint venture.
In a filing to the Hong Kong bourse, Wharf said its 50:50 joint venture with China Merchants Property Development Co Ltd had paid 2.37 billion yuan ($376.2 million) for the sites and would develop the property.
The sites cover a total area of about 72,702 square metres with total maximum developable residential gross floor areas of about 181,756 square metres, it said.
Chinese residential property prices have fallen in recent months following the government’s efforts to weed out speculation and cool the market. But authorities have begun easing controls, and China’s central bank said earlier this month that banks must provide loans to first-time home buyers.
〈Shenzhen Daily,Feb.15, 2012〉LUXURY homes in Hong Kong are increasingly appealing to mainland investors, especially those from Shenzhen, Shenzhen Economic Daily reported yesterday.
The city’s Futian District was home to buyers of three luxury homes in Hong Kong at the end of last year. Each of the homes cost more than 100 million yuan (US$15.9 million).
A woman paid a lump sum of HK$190 million (US$24.5 million) for the most expensive of the three homes, located on Hong Kong Island.
According to Midland Realty statistics, about 19 percent of Hong Kong homebuyers in 2011 were from the mainland, an 8.4 percent increase from 2010.
In addition, about 37 percent of the new and pre-owned luxury homes in Hong Kong that sold in 2011 were bought by individual buyers from the mainland, a 10.3 percent growth from 2010, according to Centaline Property data.
It took only four years for the amount of mainland buyers in Hong Kong’s luxury housing market to jump from 10 percent to more than 30 percent, the Daily said.
“Mainland buyers used to pay attention to small apartments with an area of around 50 square meters in Hong Kong, (but) have turned to luxury housing in recent years,” said Zhang Qianye, a Centaline Property manager.
Zhang said some mainland buyers of Hong Kong homes intend to transfer, or flip, their properties for profit, while others are attracted by Hong Kong’s low interest rates.
Home loan rates in Hong Kong are between 2 and 5 percent, much lower than the 7 percent rate on the mainland, said the Daily.
In addition to speculative purposes, some people buy Hong Kong homes so they can lease them to renters.
Zhang said an increasing number of middle-class people, who either work in Hong Kong or want to have their baby delivered there, are forming a potentially huge housing demand. Such buyers pay significant attention to transportation access and schools near a housing property.
Huang Jinkang, vice chairman of the Midland Group, said the increasing flow of mainland capital will benefit Hong Kong’s housing market.
Hong Kongers have been more hesitant to enter the housing market after an extra stamp duty imposed on housing transactions last year, Huang said.
But the extra duty has almost no effect on mainland housing buyers, who have enough capital and are more inclined to long-term investments, the Daily reported.
〈China Daily, Feb.14, 2012〉Banks are under fresh pressure to lower mortgage rates to attract borrowers although rising funding costs leave little room for aggressive rate cuts, a local mortgage broker mReferral Mortgage Brokerage Services said on Monday.
The broker’s chief economist Sharmaine Lau told reporters that the coming weeks will likely see the city’s banks vie for prospective mortgage borrowers by offering rate cuts. New mortgage drawdowns plunged to the lowest level in almost three years in December, down 15.8 percent from November to HK$8.9 billion, according to the Hong Kong Monetary Authority figures released earlier. New loans approved in December fell 12.8 percent to HK$10.4 billion from the previous month. Meanwhile, the number of new applications dipped 14.6 percent to 6,039.
The significant drop in mortgage lending, said Lau, is a clear sign that the city’s property tightening measures “have been effective” in cooling the world’s priciest housing market where home prices soared 70 percent from the start of 2009 to mid-2011.
Stamp duties, extra transaction taxes and higher down-payment requirements imposed by the government have spurred the decline. Meanwhile, borrowers are also deterred by the rise in borrowing costs. Hong Kong banks, led by HSBC Holdings Plc and BOC Hong Kong Holdings Ltd, jacked up their home loan rates several times last year amid tight liquidity, which saw the average mortgage rate in the city jump from below 1 percent to the current level of 2.3 percent, data from mReferral Mortgage Brokerage Services show.
But at the moment, banks seem to gravitate towards the idea of lowering rates to lure homebuyers back into the market even though the average lending rate of 2.3 percent is “still very low”, said Lau. A normal rate in her view should be in the 3-4 percent range.
“Banks need to raise interest rates” to offset their higher cost of funds, but “it’s just not the right time” after the slump in mortgage lending, Lau conceded.
Instead, banks will be tempted to offer small rate cuts to shore up demand. And some are already doing that, which should inspire others to follow suit. Among those that have lately reduced their rates are BOC Hong Kong and HSBC.
But Lau ruled out the possibility of significant reductions in the home loan rates offered by banks, and said that rates are set to rise over the longer term.
The economist expected the total value of new mortgage loans drawn down this year to be less than that in 2011. |
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