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Hong Kong Home Sales Tumble on New Down Payment Rules

By Kelvin Wong and Stephanie Tong - Jun 13, 2011 10:21 AM GMT+0800

Hong Kong Home Sales Tumble After HKMA Raises Down Payments

Property transactions fell for a fifth straight month in May. Still, home prices gained 1.3 percent in the week ended June 5 from the previous seven days, according to Centaline. Photographer: Jerome Favre/Bloomberg

Ngan Discusses Hong Kong Property Market June 10

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June 10 (Bloomberg) -- Adrian Ngan, a property analyst at MF Global Hong Kong Ltd., talks about the outlook for Hong Kong property prices. Hong Kong’s government sold a site in one of the city’s most exclusive areas below surveyors’ estimates, suggesting higher mortgage rates may be denting demand. Ngan speaks with Susan Li on Bloomberg Television's " First Up." (Source: Bloomberg)

Sales at 10 of Hong Kong’s biggest private residential developments fell 58 percent at the weekend from a week earlier after the government raised minimum down payments and deposits for foreign buyers.

Seventeen transactions took place, according to Centaline Property Agency Ltd., the city’s biggest privately held realtor, after the Hong Kong Monetary Authority on June 10 said buyers of homes costing more than HK$6 million ($770,000) will have to increase up-front payments. Foreign buyers must deposit an additional 10 percent.

The measures to curb property prices that have surged about 70 percent since the beginning of 2009 may further dent buyer sentiment that is already showing signs of weakening following a recent drop in home deals and as banks accelerated mortgage interest rate increases this year. It was the government’s fourth attempt since October 2009 to curb inflating residential values, rated by Savills Plc as the world’s most expensive.

The measures “show the government’s determination to hold prices at their current level,” said Lee Wee Liat, a property analyst at Samsung Securities Ltd. in Hong Kong. “It may signal they will take more significant steps and that’s to limit the number of units foreigners or mainlanders can buy in the city.”

The seven-member Hang Seng Property Index dropped 1.2 percent as of 10:15 a.m. in Hong Kong trading to the lowest since Sept. 1, 2010, compared with the 0.8 percent decline in the benchmark Hang Seng Index. (HSI)

Property transactions fell for a fifth straight month in May. Still, home prices gained 1.3 percent in the week ended June 5 from the previous seven days, according to Centaline.

‘Picking Up’

The curbs “came at the right time as there are signs suggesting prices may take off, as sales activities of new homes in recent weeks have been picking up again,” Lee said.

Properties costing HK$10 million or more will require a 50 percent down payment, HKMA Chief Executive Norman Chan said on June 10.

“These new rules will have an immediate impact,” said Jeffrey Ng, a senior executive director at Hong Kong Property Services Agency Ltd., a unit of Midland Holdings Ltd., Hong Kong’s biggest publicly traded realtor. “It will slow down the pace of those who’re looking to buy properties.”

Borrowers whose income is primarily from outside Hong Kong will need to make a higher down payment unless they can demonstrate a “close connection” to the city such as evidence that they work for a local employer or that an immediate family member resides in Hong Kong, the HKMA said in a statement.

‘Need Time’

“This will definitely affect our clients from both overseas and mainland China,” said Louis Chan, managing director for residential properties at Centaline. Chan predicted home transactions will slow by about 10 percent to 20 percent over the next few weeks “as potential buyers need time to adjust to the new rules,” he said.

Buyers from overseas and other Chinese cities accounted for about a third of luxury home transactions in the first quarter of this year, according to Centaline.

Prices may drop 10 percent to 20 percent in 2012 and a further 10 percent in 2013 on rising rates, Andrew Lawrence, a Hong Kong-based analyst at Barclays Capital, said last week.

That may be good news for Joseph Hau, a 38-year-oldinvestment adviser who is looking to move to a bigger apartment with his six-month pregnant wife. Hau lives in a 500-square foot apartment in the Wan Chai district.

‘Wait a Little’

“We’ll probably wait a little and see whether prices will come down,” said Hau on June 11 outside a strip of property agencies in Tai Koo Shing, a middle class residential development in the Island East district on Hong Kong Island.“We’ve been negotiating with the owner for a couple weeks and he’s been quite hard. Maybe after these new rules he’ll change his mind.”

Before the latest measures, the HKMA on Nov. 19 increased stamp duties on homes sold within six months of purchase and mandated higher down payments on those costing HK$8 million or more.

The city also has pledged to boost land supply amid public protests that housing prices are becoming unaffordable. In the latest land auction by the government on June 9, Cheung Kong(Holdings) Ltd., controlled by billionaire Li Ka-shing, agreed to pay HK$11.65 billion for a site on Borrett Road, about a 10-minute drive from the Central business district. The price was equivalent to HK$26,763 per square foot, said Centaline.

“Although the property market cooled down a bit in March and April this year, there are now signs of renewed exuberance following high transaction prices recorded in recent government land sale auctions,” HKMA’s Chan said. “The property market has been volatile” since November.

Good Post Bad Post

13-Jun-2011 11:02

Others / S-chips like rubbish and shit now!

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x 0

There is reason why people wants to say that.

US also taking measures about the S-chips listed there....... more to come...

Hulumas ( Date: 13-Jun-2011 10:40) Posted:

Just small note. It is written " S-cheat" in your posting, that is not appropriate! Why can't we just write S-chip or S-chips?

AnthonyTan ( Date: 13-Jun-2011 10:31) Posted:

As long as you do not slander anybody and express

your personal view points should be safe , e.g. why

I think this S-cheat stock is no good blah blah blah

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13-Jun-2011 11:00

Straits Times Index / STI to cross 3000 boosted by long-term investors

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x 0

its a big jump " Up" of 1 %.

Laulan ( Date: 13-Jun-2011 10:58) Posted:

I doubt STI would fall below 3,000 and further because I heard recently that the Singapore economy is growing at 6.2 per cent from the previous five over percent...I believe it is time to buy and hold.

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13-Jun-2011 10:53

CapitaLand / Capitaland

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Friend, dont worry,

In the eyes of Isolator, you are his master and Sifu, and you will always be, no matter what.

iPunter ( Date: 13-Jun-2011 10:52) Posted:

I don't follow anyone. All players are equal.

Isolator and Capland have

different styles stock styles (Both are correct).

And all have different styles of playing.

And sifu Isoloators style make a lot of sense

to a lot of traders who trade to enjoy the game... Smiley

niuyear ( Date: 13-Jun-2011 10:38) Posted:

Wow, Isolator has a very truthful follower and supporter who never fails to support each of his post.

LOL

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13-Jun-2011 10:52

Straits Times Index / STI to cross 3000 boosted by long-term investors

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x 0

Some said if any how say things about S-chips , will be sued.

What about saying : come downto short it down.

Can get sued also?

des_khor ( Date: 13-Jun-2011 10:36) Posted:

Come here to short it down !! especially S-Chips !

Hulumas ( Date: 13-Jun-2011 10:30) Posted:

It should be so, I think

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13-Jun-2011 10:49

CapitaLand / Capitaland

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No insult elements in my message, but, rather, the way you interpretated it while reading them during 'whatever' state of mind you might be engaging in.

Isolator ( Date: 13-Jun-2011 10:41) Posted:

Dont insult Sifu IPunter, he is the true master... I always learn from him....

niuyear ( Date: 13-Jun-2011 10:38) Posted:

Wow, Isolator has a very truthful follower and supporter who never fails to support each of his post.

LOL

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13-Jun-2011 10:38

CapitaLand / Capitaland

Go to Message

x 0

Wow, Isolator has a very truthful follower and supporter who never fails to support each of his post.

LOL!

iPunter ( Date: 13-Jun-2011 10:30) Posted:

This post by sifu Isolator is an extremely

valuable one for all traders and investors alike.

Unconforming methodology and sensibility

are priceless attributes in this game...

On behalf of all, thank you, Sir... Smiley

Isolator ( Date: 13-Jun-2011 10:16) Posted:

Go back to the basis of TAs like patterns, MAs, waves, macd, fibo etc.... You should be able to spot most.... BUT you should learn to use them the UNstandard way.... lol

You must have a strong capital to play trend changing.... You will enter too early which may go against you, so you need to be able to hold and average....

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13-Jun-2011 10:30

Others / is the mass production of housing is the right way

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I think the future scenario of hdb in s'pore wld be :

The price of property in singapore 'hard" to drop much due to scarce of land.

So,

Those who cant afford to buy hdb flats, may choose to rent from HDB at cheap and subsidised rate.

Those who can afford to buy a hdb flat, must stay at least 10 years.

This will result in fewer transactions in order to stabalise the market.

The SCARY fact is : (if it happens.............)

Private property owners who wish to own HDB flat, must only be able to do so after 4 or 5 years (presently is 2 1/2 yrs) of sellling of the private property.

des_khor ( Date: 10-Jun-2011 15:03) Posted:

The goverment wants the prices to come down by implement to sell more lands to build more homes . The hosing prices will come down when supply over take demand ....SG developer in danger.....

Salute ( Date: 10-Jun-2011 12:52) Posted:

it's inviting foreigners to buy the pte housing and for the mass building may be to get ready for the extra 2 mils. pop. Do we need that out of a sudden.

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13-Jun-2011 10:01

CapitaLand / Capitaland

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x 0

The way you post and declare making profits here everyday, is an envy of everyone here (even the 2 famous persons i suppose if they happen to read your posts here). Looks like way past the wealth of many.

The 2 famous persons we all know:

1) Warrent Buffet - an investor

2) George Soro - a true blue trader (shorted the Pounds, created havoc in Thai baht)

Isolator ( Date: 13-Jun-2011 09:49) Posted:

Mr Fool, no matter what you write and copy from.... CPL will still be going down..... You seems to be just a follower of some analysts... I think by now, have you got 1000lots already since you mentioned you will keep buying... 100lots each time....

As for me, I have bought back 80% of my shorts.... Very pathetic only can earned around 16ct.... Unlike you always earning millions...

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13-Jun-2011 09:49

Others / is the mass production of housing is the right way

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Singapore is a precious Magnet ,pulling people from all over the world, from east to west to come here. This happened as early as 19th century.

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13-Jun-2011 09:38

Straits Times Index / STI to cross 3000 boosted by long-term investors

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hedge fund companies are slowly moving here.

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10-Jun-2011 12:01

CapitaLand / Capitaland

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Then, the " Sai Gong" can " liam geng" (say chinese/dialects' prayer) and make more money............hahaha!

Isolator ( Date: 10-Jun-2011 11:55) Posted:

Will be messy when many empty units around... It will be huanted since no human staying.... lol

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10-Jun-2011 11:54

Others / S-chips like rubbish and shit now!

Go to Message

x 0

China companies' accountants not qualified? hahaha!

warrenbegger ( Date: 10-Jun-2011 01:03) Posted:

S-cheat news again! See! S-cheat (Aka, Super-Cheat) so famous now internationally world wide... Zzzzzz

http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/1134192/1/.html

Beware of China investment risks

The Wall Street Journal quoted Martin Wheatley, former chief executive of the city's Securities and Futures Commission (SFC), as saying that investors could get burned if they rush into Chinese firms without putting their books under a microscope.

Worries about the accuracy of Chinese firms' books have long dogged the country and Wheatley's comments come amid heightened scrutiny of some Chinese companies, particularly those with foreign listings.

The US Securities and Exchange Commission is probing accounting issues at several Chinese companies that trade on US stock exchanges, with some Chinese companies having seen their shares suspended over allegations of accounting irregularities and other improprieties.

warrenbegger ( Date: 31-May-2011 23:26) Posted:

This is the lastest about S-cheat on 15 May 2011. Pls read more if u still playing with S-cheat, just for your own good :)

There are still many S-cheat out there, is either U play them or U play by them, go find out more yourself before U kanna burn :)

Chinese stock scams are the latest U.S. import

http://sg.finance.yahoo.com/news/Chinese-stock-scams-latest-U-rsg-3640837820.html?x=0

Pump and dump scheme. Finance chief resigned. A member firm of the " Big Four" accounting company's global network, severed ties to the company. Investors chase the next hot Chinese stock -- only to find themselves victims of scams. Many of the questionable Chinese companies gain access to U.S. capital markets through a back door. Of the more than 600 companies that obtained entry to U.S. exchanges this way between January 2007 and March 2010, a total of 159 were from the China region, according to the Public Company Accounting Oversight Board (PCAOB). While many are legitimate, some turn out to be outright pump-and-dump schemes and other scams. This has taken U.S. exchanges by surprise. NYSE and Nasdaq have delisted several companies and have a veritable " skid row" of more than a dozen firms that have been halted for weeks or months pending requests for information about accounting problems and late regulatory filings. " You see these Chinese companies that have these great numbers, they never miss a quarter of earnings. They are always right on. Their expenses are low. Their growth is tremendous, regardless of the economy. So you go, 'Hmm, this doesn't make sense'," said Left. Efforts to inspect Chinese auditing firms have met resistance from Chinese authorities, but Doty told Reuters this week he expected progress this year, in part because the various problems with Chinese firms had shown authorities in Beijing the importance of credible auditing. " I'm afraid for my personal safety in some areas of China," Qin said. He told Reuters that some companies colluded with employees at major Chinese state-owned multinational banks to provide false bank statements, though he would not specify which ones. " Just because it is China doesn't mean it is a path to riches," Left said.

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10-Jun-2011 11:31

CapitaLand / Capitaland

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typo error - should be " will be very messy"

niuyear ( Date: 10-Jun-2011 11:29) Posted:

Land, land and land, nothing but land.

We are competing for scarce lannd in Singapor. Its going to be expensive , my personal view. :)

Years back, we were talking about ROOF TOP greennery whereby projects are being studied and looked into vegetation . Now, we are talking about, planting vegetables etc on the ground floor.

Which means, we 'might be' seeing 'Greens' on the ground level as well, but, though, some has concerned that it will not very MESSY if planted on the ground level.

Imagine, all HDB areas planted with Vegetables around the housing estate. (But i think its good cos eg, Woodland residents can 'get' vegetables at their own we areas).

We have to become SELF SUFFICIENT in order to compete with FOOD LIMITATIONS COMING TO OUR WAY, NOT ONLY US, BUT THE WHOLE UNIVERSE. Demand of foods all over the world has jumped to a very high level............

Isolator ( Date: 10-Jun-2011 10:15) Posted:

You are really easily brainwash by some news... You have self filter system which only take in what you want to hear...Anyway remember what you said now... Quote your statement... " Do u think properties insingapore will drop? Even the last measure did not cool down the heat. More chinses and arab investors are coming in to invest. And most don know, they don not rent out"

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10-Jun-2011 11:29

CapitaLand / Capitaland

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Isolator ( Date: 10-Jun-2011 10:15) Posted:

capland ( Date: 10-Jun-2011 10:08) Posted:

good say. then we both self-reflection lo.. wa just imagine 3 rm at AMK selling for 400,000....when it cost only 37,000 the last time in the 80s...Do u think properties insingapore will drop? Even the last measure did not cool down the heat. More chinses and arab investors are coming in to invest. And most don know, they don not rent out. Most of them paid in cash, and leave it . The more uncertainty in the rest of the world, actually brings more to come here, to stays and invest. cos singapore is " fine" . No natuaral disaster ( only flood that cause shoppings inconv) and govt stable. I think more will come , eps from the middle east...bukit timah (my plc) recwently saw alot of middle east. Even my new neighbour is from the UAE , which is in oil industry. Imgine he bought 18m cash, from my old neighbour. And it makes me stunn, he tored off the house and " rebuit it. He told me he spent 3 m to just renovate the house...this evening i and my family will be invited to attend their :house warming" , really must see the 3m renovation...must be like a palace...i heard he personnaly went to italy to import the marble...rich until like that while most singaporeans worry about buying a HDB cost a fraction to his house. So, ah wah, if we were to compare to them, we are alll small " nuts"

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