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HONG KONG: About 40 flats bought by speculators at the new Yoho Midtown residential development in Yuen Long released at the weekend have been immediately advertised for sale on the secondary market at asking prices of up to 20% more than the prices buyers had originally paid.
Agents said the buyers were mostly wealthy and experienced, and were seeking quick returns on investment funded by low interest rates.
The move has raised concerns that speculation seen in the luxury housing segment in recent months is now spreading to the mass market and will reinforce expectations that the government is poised to act against excessive property price rises.
In an effort to cool the overheated luxury flats market, Financial Secretary John Tsang Chun-wah is expected to announce in his policy address on Feb 24 an increase in stamp duty on the sale of flats priced higher than HK$20 million (RM8.76 million) to 4.5% from 3.75%.
While the move will have only a limited impact as such flats account for less than 2% of the market's transaction volume, analysts say the government may also raise property supply by resuming regular land sales and releasing smaller land plots for bidding so that more developers can participate in the market and increase competition.
"The government has already subtly changed from a non-interfering stance to a more controlling mode, in view of the accelerated land releases in the last two months," UOB KayHian analyst Sylvia Wong said in a report.
Yoho Midtown developer Sun Hung Kai Properties said on Feb 21 it had already reached its target of selling 700 units of its 1,890-unit Yoho Midtown residential project and was aiming to sell 900 units by the end of the day for a total of HK$4.2 billion.
Ranging from HK$4,200 to HK$11,000 per square foot, the average selling price was HK$5,400 per sq ft, about 24% higher than secondary market prices. Some units put up for sale on Feb 21 were priced at 3% to 5% higher than the flats sold on Feb 20.
"There is some speculation but it's not severe," Hong Kong Property Services (Agency) chief executive Richard Lee Chi-shing said. "No re-sale transaction has been recorded and most purchasers are well-heeled investors."
He said Yoho Midtown prices and the pace of sales were within expectations.
Midland Realty director Sammy Po Siu-ming said about 30% of the buyers are investors and the remainder, end-users.
"The pace of price increases in the mass housing sector has picked up recently, but so far the market is still healthy as it is dominated by users," Po said.
Yoho Midtown is the city's biggest housing project to go on sale so far this year. It is the second phase development of the Yoho Town project.
The market for new flats has been particularly robust in the past year, with more than 80 per cent of the 14,000 units launched sold at a significant premium to secondary market prices, according to a UOB KayHian research report.
Most buyers of new flats pay interest rates of 2% or less on their mortgages, with some choosing to link their payments to the near-zero but volatile Hong Kong Interbank Offered Rate (Hibor), paying less than 1%.
Cheung Kong (Holdings) executive director Justin Chiu Kwok-hung earlier this month warned the Hong Kong property market had risen too fast – 40% from June to January -- and buyers must watch out for a bubble and a correction.
According to figures compiled by Centaline Property Agency, secondary residential properties could total 8,800 transactions this month, up 2% from January.
Their total value is forecast to increase 1.3% to HK$30 billion. February's volume and value are expected to be the highest in five months. – South China Morning Post
