Mr Cheng: Sub-prime crisis has temporarily affected property market WING Tai Holdings' head honchos yesterday said the US sub-prime woes have slowed property transactions across the whole market here but believe that property prices are still on a growth path 'if the sub-prime (crisis) stabilises within a reasonable period'.
Wing Tai chairman Cheng Wai Keung said: 'Yes, temporarily, it has affected some of the take-up rates. But it is actually not a bad thing. The market needs a bit of consolidation. High-end home prices have gone up 100 per cent within the last six to nine months. It's just not sustainable. But if sub-prime settles within a reasonable period, I believe there is still room to grow in the property market. We are not at the end of the property cycle.'
Mr Cheng and his brother, Edmund, the group's deputy chairman, were fielding questions during the group's full-year results briefing.
'On the other hand, if sub-prime or the credit market continues to be in turmoil and it affects confidence in general, then of course it will be a completely different scenario,' he added.
Mr Cheng also acknowledged that Wing Tai had seen an increase in buyers not exercising options but the rate is 'not alarming', at 'just a handful'.
Buyers giving up options is a factor of two things: how aggressively a developer pushes for a sale and its selling price. 'Our style is that given that the market is slow, there's no point to push for a sale (and then have the buyer) back out later. Secondly, our pricing maximises our profit but we also leave something on the table (for the buyer) so at least he has a hope that the price is supportable,' Mr Cheng said.
As for the proposed changes to legislation governing collective sales, Mr Cheng reckons they will slow down en bloc sales since such deals will now take longer to execute. 'From a positive angle, it will slow down supply of land with redevelopment potential which means there will be less competition for companies that already have some landbank. But on the other hand, if you have less land to buy, then you cannot grow your business as fast as you would like to.
'But given the recent run-up in property prices, people will be a lot more cautious in buying more development land. So in a nutshell, I think it's good. At least it allows the market to consolidate and adjust itself, and also takes away some of the uncertainty under old en bloc rules.'
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