Property deals in Hong Kong fell to a seven-month low in September as homebuyers and investors stayed on the sidelines awaiting the start of a policy easing cycle, analysts said.
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But now that the cycle has commenced – with rate cuts from the US Federal Reserve and the Hong Kong Monetary Authority (HKMA) – property deals are likely to pick up.
“Major developers have been preparing to launch projects to capture the pent up demand following the interest rate cut,” said Eddie Kwok, the executive director for valuation and advisory services at CBRE Hong Kong. “At the current high inventory level, developers are still likely to prioritise competitive pricing where we foresee primary sales transactions to rebound in coming months.”
Sales of new and lived-in homes, offices, shops, car parks and industrial spaces dropped 18.7 per cent to 3,843 units in September, from 4,729 in August, according to data from the Land Registry. It is the lowest tally since February, when restrictions on property buying were still in place.
Total sales value fell by about a fifth to HK$27.7 billion (US$3.57 billion) from HK$34.3 billion in August, also the lowest point since February. And home sales fell 22 per cent to 2,848 units in September from a month earlier.
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Two weeks ago, the Fed cut its benchmark interest rate by a half point and the HKMA followed suit. Hong Kong’s de facto central bank adjusts its policy based on what the Fed does to keep the local currency’s peg to the US dollar. Those moves paved the way for Hong Kong’s commercial banks to trim their rates, which is expected to translate into savings for borrowers who tie their loans to prime rates.
For example, on a HK$5 million loan over 30 years priced at prime minus 1.75 per cent, a reduction lowers the mortgage rate to 3.875 per cent, meaning the monthly payment drops by HK$720 to HK$23,512, according to mReferral, a local mortgage broker.