HK luxury home sales soar on mainland deals

Prices jump 28% in first nine months as low mortgage costs fuel buying: Colliers

(HONG KONG) Hong Kong's luxury home sales almost tripled in September from a month earlier, as mainland Chinese residents flocked to buy flats in the city.

The registered sales of residential units worth more than HK$10 million (S$1.8 million) rose to 1,351 from 500 in August, according to Land Registry figures released on Monday.

A one-bedroom apartment in Hong Kong's Kowloon district was bought for HK$30,025 per square foot last month, a record for a property of that type in the city, Centaline Property Agency Ltd said. The home was sold for HK$24.5 million.

Luxury home prices in Hong Kong climbed as much as 28 per cent in the first nine months of the year, as low mortgage costs fuelled buying, according to Colliers International Ltd.

Prices may rise by between 5 and 10 per cent in the next six to 12 months, the global real-estate broker said last month.

'The luxury home market is very active,' Buggle Lau, chief analyst at Midland Holdings Ltd, said yesterday. 'Capital from the mainland and overseas is contributing.'

There is 'enormous liquidity and buying' from Chinese residents, Martin Cubbon, executive director of Swire Pacific Ltd, said on Sept 29.

The aggregate number of homes registered increased to 12,285 from 11,250 in August, the government said on its website.

'We probably will see consolidation after home prices, especially luxury apartments, jumped quite a bit, because the market thinks interest rates may have bottomed out,' Credit Suisse analyst Cusson Leung said in an interview.

Mortgage rates in Hong Kong are the lowest in at least 19 years as banks seek to offset slower demand for other types of credit.

Lenders have cut mortgage rates 'to such an extent that they might not have given due regard to the reputation risk, interest rate risk and liquidity risk potentially associated with their pricing', Hong Kong Monetary Authority (HKMA) deputy chief executive Y K Choi said on Sept 17.

'Average mortgage rates are going to pick up gradually,' Peter Wong, head of the Hong Kong unit of HSBC Holdings plc, said in the city last week.

New mortgage loans approved fell 8.2 per cent in August from a month earlier to HK$34.2 billion, the HKMA said last month.

Hong Kong home prices may fall in coming months as Chinese investors face a slowdown in lending growth at home, reducing their buying power, said Mr Leung at Credit Suisse. 'Mainland investors' appetite goes along with growth of liquidity in China, which has already showed signs of slowing down,' he said.

China's banks extended 410.4 billion yuan (S$80.3 billion) of local-currency loans in August, up from 355.9 billion yuan in July, according to official figures. New lending in September may fall to a range between 300 billion and 400 billion yuan, China Banking Regulatory Commission chairman Liu Mingkang said on Monday.

Hong Kong is the world's fifth-most expensive residential real estate market, after Monte Carlo, Moscow, London and Tokyo, according to Global Property Guide. -- Bloomberg

Source: Business Times, 7 Oct 2009