My Hong Kong classmate told me that due to the size of her home in Hong Kong, every time they wanted to play mahjong, one of the player would be sitting inside the toilet. That was 19 years ago. I think since then, due to the vibrancy of the Hong Kong property market, the size of the homes have been getting smaller while the prices climbing higher. Transactions continue to increase because everyone wanted a roof over their heads, regardless of size. Some chose to stay much further away from the CBD for bigger size and lower price. The situation has changed.
According to an article in South China Morning Post in February 2016, the property sales transactions in Hong Kong has dropped 41 percent month-on-month or down 62 percent on a year-on-year. Part of the reason is because developers have slowed down their launches due to negative sentiments. Recently, the same publication revealed that another developer, Sino Land has cut prices and sweeten its mortgage terms to boost sales because of the slowing market. It raised its discount on the 30 units of its The Mediterranean project in Saikung by up to 26 percent. It was at 14.5 percent in December 2015. Buyers would now be able to borrow up to 85 percent instead of the earlier 80 percent. Read the full article here. As for buying a unit after discount, buyers would need to pay HK$9,989 (RM5,044) per square foot, down from HK$12,331 per square foot. Actual price per unit ranges from HK$5.89 million to HK$11.39 million. For example, a 666 sq ft unit on the first floor of Block Five will be HK$6.65 million (RM3.36million)
I think it’s very clear that when markets really do slow down tremendously, the developers with existing projects would be under tremendous pressure as well. This is true even for Malaysia. That’s why we see many developers delaying their launches since last year, even for the bigger names. In Malaysia however, I have seen just a few advertisements about discounts. I think majority area focused on rebates and incentives instead. In other words, situation is considered still ‘moving.’ Hopefully, this is because majority of the investors are on the sidelines while those who would buy are actual occupiers. Happy following.
written on 2 May 2016
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