Weaker buying sentiments due to ongoing hike in interest rates and slowdown in new launches by developers pushed property transactions in Hong Kong to register a four-month low in May.
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In its latest research, Ricacorp Properties, the largest real estate company in Hong Kong, said that the number of property deals fell 8 per cent in May, compared with April this year. The corresponding transaction value shrank 26 per cent to a three-month low of $5.81 billion.
The monthly registrations are likely to hover around 5,350 in June, an increase of 1.56 per cent month-on-month. It is expected that after the consolidation in the second quarter and after the accumulation of purchasing power, there will be a more significant breakthrough and recovery in July at the earliest, the research said.
“With large-scale low-priced orders once again coming into the market, and with the expectation that industrial and commercial shops will continue to build well, the overall building transaction volume can maintain a slight upward trend in June,” the research noted.
Chen Haichao, director of Ricage Real Estate Research Department, pointed out that the property market recovered month after month in the second quarter. After recording a slight decline in May, it is expected to continue to consolidate in June, and the accumulated purchasing power will explode again in the second half of the year.
A sharp decline
According to the data from Hong Kong’s Land Registry, 5,268 building transaction registrations were recorded in May, sliding by 8 per cent from the 5,746 in April, a record high of nearly 4-month low; and the overall property registration value recorded a decline for two consecutive months, reaching a new low in nearly three months.
The number of first-hand private home sales registrations decreased significantly in May, mainly due to the impact of the pace of large-scale new property sales, and the fact that the local banks raised interest rates in early May, which slightly cooled the market and dragged down first-hand property sales in May.
Only 943 registrations of private house sales were recorded, a sharp drop of 38 per cent month-on-month; the total value of sales registrations recorded during the month dropped by 58 per cent correspondingly, recording $1.54 billion.
In addition, the first three new projects with the most registrations of first-hand private houses in May were UNIVERSITY HILL Phase 2A (327 units), Fei Yang Phase 1 (87 units) and KOKO MARE (83 units).
According to Ricacorp’s research, registrations of second-hand private house sales in May rose slightly by 34 or 1 per cent month-on-month, recording 2,655 registrations. It is the third highest level this year.
However, as first-hand new properties continued to compete for purchasing power at discounted market prices, and the local bank raised interest rates again, it also hindered the second-hand rebound.
Non-residential market has been the best-performing category as it was driven by notable increase in both shops and parking spaces.
The number of non-residential property registrations in May reversed its downward trend as the overall industrial and commercial store and other transaction registrations rose 9 per cent month-on-month, recording 768 transactions.
However, the amount of transaction registrations during the month fell sharply by 26 per cent, recording $820 million, mainly due to the large amounts of transactions in the previous month.
Chen Haichao also said that after the massive purchases of property in the first quarter, there was a month-to-month consolidation in April and May, and the effect of customs clearance has come to an end.