Property sales plunge 48% in November

The total deal consideration was $43.3b.

Hong Kong’s real estate market continued to weaken as property sales plunged 48% YoY and 26.4% MoM to 3,953 sale and purchase agreements in November, according to a government statement. 

The total consideration for sale and purchase agreements in November hit $43.3b which represents a headline figure down by 35.1% YoY and 4.9% MoM.

Of November’s sale and purchase agreements, 2,635 were for residential units which hit a total consideration of $26b.

Also read: Hong Kong home price war heats up as developers rush to unload stock

The dismal figures mark the end of the freewheeling years of Hong Kong’s residential market as the sector increasingly heads for a pricing correction of 15% to as much as 25% by 2019 after nearly ten years of consecutive growth, real estate consultant JLL said in a report. 

Buying sentiment has taken a heavy beating from the escalating trade tensions between the US and China as well as the latter’s efforts to curb financial sector risk. Given the local property market’s heavy reliance on Chinese demand and capital, sales and transactions in both the commercial and residential property segments have already started feeling the heat of the pull-back. New-home transactions in October fell to $11.2b which is the lowest level in 16 months whilst September witnessed the fewest luxury home transactions since 2005. 

Also read: Commercial property transaction volumes plummeted 65% in Q3 as rattled Chinese investors retreat

With a correction looming, the government’s various cooling measures which have been in place since 2009 need to be reviewed for their viability as the once heated market appears to no longer need limits as it automatically trends downwards.

“With housing prices starting to slide, the Government needs to urgently re-asses some of the cooling measures that it has introduced over the years,” Joseph Tsang, Executive Director at JLL in Hong Kong, said in an earlier statement. “We urge the government to remove the Special Stamp Duty (SSD), review the application of the Ad Valorem Stamp Duty (or Double Stamp Duty) and lift LTV ratios.”

The SSD was first introduced in November 2010 but was extended in October 2012. The DSD, on the other hand, was raised to 15% on November 2016 which was then extended to buyers acquiring more than one residential property under a single instrument in April 2017, a timeline from JLL show.

“[T]he Government will be in a better position to mitigate the growing downside risks in the macro-environment and orchestrate a soft landing for the housing market by addressing the three measures. That would be in the best interest for Hong Kong.”