HK's 2008 New Home Sales Lowest In 12 years

Source : The Business Times, January 15, 2009

(HONG KONG) Hong Kong's sales of new private homes fell to the lowest level since 1996 last year, as high prices and the slowing economy deterred potential buyers, according to Centaline Property Agency Ltd.

The number of new non-government- built residential units changing hands last year fell 47 per cent to 9,955, Wong Leung-Sing, an associate director at Centaline, one of the city's biggest real estate agencies, said yesterday. The average value was HK$7.73 million (S$1.48 million), the highest since 1996, he said.

'Sales started to slow in May, as the pace of price increases was too fast,' Mr Wong said in a phone interview. 'Buyers held back. This worsened in the third quarter, when the financial tsunami hit Hong Kong.' Average prices rose on sales of luxury units costing at least HK$10 million each, he said.

Hong Kong's economy contracted a seasonally adjusted 0.5 per cent in the third quarter from the three months through June. Gross domestic product shrank 1.4 per cent in the second quarter, as the global financial crisis cut exports and spending cooled.

City Chief Executive Donald Tsang said last month that a recession this year is 'inevitable'. The bad outlook may lead developers to hold back housing from sale this year, Cusson Leung, an analyst at Credit Suisse here, said yesterday.

'They will slow down sales because they won't be sure if the market can absorb all their units at one go,' Mr Leung said. He estimated that 11,000 new homes will be completed this year, compared with 9,000 in 2008. Developers may have already sold some of these units before completion, he said.

Cheung Kong (Holdings) Ltd, Hong Kong's second-biggest property developer by market value, sold the most new private homes last year, 2,838 units, Centaline said. Second was Sino Land Co, with 1,385 units.

Sales of all types of residential units fell for a sixth month in December, dropping 65 per cent from a year earlier to 4,706, the Land Registry said last week. -- Bloomberg