Home sales in Hong Kong, where prices have surged to a record high, are set to extend declines as buying interest slumped with a stock rout, according to one of the city’s two largest property brokers.
Transactions of properties valued from HK$10 million to HK$20 million (US$1.29 million to US$2.58 million) might shrink 20 percent this month from last month, Louis Chan (陳永傑), chief executive officer of the residential unit of Centaline Property Agency Ltd (中原地產), said in a phone interview. Sales of all existing homes done by the closely held real estate agency fell as much as 30 percent last month, Chan said.
Hong Kong’s benchmark Hang Seng Index tumbled 12 percent last month, with the gauge slumping 5.2 percent, or more than 1,000 points on Aug. 24, as concerns about a slowdown in China sent equities worldwide into a tailspin. The index is down another 4 percent so far this month.
“We got quite nervous on the day when the Hang Seng Index dropped 1,000 points, because our daily revenue vanished 50 to 60 percent in a single day,” Chan said.
Average selling prices of existing units might drop 3 percent by the end of this year from current levels, he said.
Hong Kong monthly home sales were the weakest in 17 months last month, the government said on Wednesday. The city sold 3,896 residential units last month, about one-third fewer than a year earlier.
“Hong Kong’s housing market had a relatively high correlation with the equity market in the past, so the recent slump in stocks may weigh on property buyers sentiment in the short term,” Mizuho Securities Asia Ltd analyst Alan Jin (金增祥) said by telephone.
“In a longer term, I believe the city’s property market will remain largely stable for the rest of the year unless we see some major macro headwind, such as a deterioration in employment,” he said.
Developers including Henderson Land Development Co (恆基地產) have been offering second mortgage loans and raising commission to agents to sell homes, the South China Morning Post reported on Monday last week.
The volume of contracted sales at Centaline for existing apartments valued from HK$10 million to HK$20 million tumbled 50 percent last month, Chan said. The broker’s commissions, which are seen as an indicator of the city’s housing market, dropped about 37 percent last month from the previous month, he said.
Chan said that he expects selling prices for new properties to be set about 10 percent lower this month than in late July and early last month.
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