Hong Kong developers seen slowing home sales to control prices

Developers are expected to put the brakes on home sales for the rest of the year after government curbs to rein in prices sapped demand, according to BOCOM International Holdings and Centaline Property Agency.

“The pace of sales will remain slow unless there’s something encouraging developers to turn over assets faster,” said Mr Alfred Lau, a Hong Kong-based analyst at BOCOM. He added that they have “little incentive to sell at a time when the market’s down”.

The government needs to lower premiums charged either on farmland bought by developers with the aim of converting it to residential use, or on projects sold atop railway stations, to encourage developers to accelerate sales, he said.

Property transactions in the city plunged to a two-decade low in the second quarter in response to a doubling of stamp duties on buyers and sellers, and tightened regulations on marketing material of new apartments. Home prices have also dropped 2 per cent from March.

Concerns that more curbs will be introduced and expectations that interest rates will begin rising may send home prices down by as much as 10 per cent in the second half, according to Midland Holdings, Hong Kong’s only listed real estate agency.

The government will not ease the curbs until there is a steady supply of new properties, Chief Executive Leung Chun-ying said in a Bloomberg interview last month. He has sped up approval of developers’ home sales applications to make more new units available to buyers, while also allowing developers to begin selling apartments sooner before construction is scheduled for completion.

“All the measures to curb activities are negating whatever the government’s trying to do to accelerate sales,” Mr Wong Leung Sing, Associate Director of Research at Centaline said. “They’ll need to figure out a different way.”

Source : Today – 6 July 2013

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