HK Home Sales Plunge 65% In Dec For The Sixth Month

Source : The Business Times, January 6, 2009

(HONG KONG) Hong Kong's home sales fell for the sixth month in December, the longest stretch of declines since 2006, as local lenders raised mortgage rates and tightened lending as the economy slowed.

The number of residential units changing hands last month slumped 65 per cent from the same month in 2007 to 4,706, the Land Registry said in a statement yesterday. That follows a 79 per cent decline in November, the biggest drop since at least 1996.

By value, sales dropped 66 per cent to HK$17.7 billion (S$3.4 billion).

The economic outlook and declines in Hong Kong's stock market have curbed demand for real estate and led potential buyers to expect cheaper prices. The Hang Seng Index dropped 48 per cent in 2008, the biggest decline in more than 30 years.

HSBC Holdings and Bank of China, the two biggest home lenders in Hong Kong, raised their mortgage rates last month. HSBC, the bank with the most branches in the city, narrowed its discount for mortgages to 1.5 percentage point below its so-called best rate from two percentage points.

Banks in Hong Kong approved HK$8.5 billion of new mortgage loans in November, 69 per cent less than a year earlier, figures from the Hong Kong Monetary Authority show.

The number of luxury residential units in Hong Kong, those costing more than HK$10 million, sold fell 31 per cent to 4,509 units last year, Centaline Property Agency Ltd, one of the city's biggest real estate agencies, said in a report yesterday.

'Sales were robust in the first half of the year, averaging 500 units a month, but cooled in the second half because of the financial tsunami,' Wong Leung-sing, an associate director at Centaline, wrote in the report.

'As buyers turned cautious on paying for expensive property, transactions fell to fewer than 200 units a month in the second half,' he said. -- Bloomberg