Sales of new homes in hong kong set to slow down

The firm’s latest market update, available to read here, says that Residential Properties (First-hand Sales) Ordinance, which came into effect on 29 April and requires that sellers regularly update and maintain marketing materials relating to the sale of residential property, will hurt sales in the city.

Before the Ordinance was introduced, developers offered “aggressive” discounts to sell properties in anticipation of a slowdown. Now, the laws, which are designed to improve transparency in the market, require them to prepare new marketing materials in keeping with the laws - a task that left only three residential projects offering less than 200 units available for sale last month.

Sentiment in the resales market recovered slightly, adds Knight Frank, with sales of small to medium-sized units growing due to vendors softening their stance on asking prices combined with a shortage of new home units on the market.

According to the Rating and Valuation Department, 13,551 new homes are forecast to be completed this year and 15,817 in 2014, with the majority located in the New Territories.

“With the various tightening policies in place and market sentiment remaining cautious, we believe there will be a drop in activity in both the new-home and resale markets over the next few months,” commented Knight Frank.

Thomas Lam, Knight Frank’s Head of Research & Consultancy for Greater China, added: “Residential sales will fall about 10% this year from 70,000 to 75,000 units, with mass residential prices dropping around 10% and prices in the more resilient luxury sector falling 5%.”