To take advantage of the rising prices and changing sentiments in Hong Kong's lucrative real estate market, developers are now churning out projects that will soon create thousands of new homes for residents and foreign investors. According to reports, Hong Kong's developers are now planning to offer more than 9,000 homes in the second quarter of this year. That number is almost half of the government's annual housing target.
The increase in the number of available homes in the country may have an adverse effect as it would likely decrease overall home prices due to fierce competition. Analysts predict that competition will likely drive developers to offer large discounts to lure in more buyers.
According to Ricacorp Properties' head of research, Derek Chan, due to a large number of competition in the coming months, developers will likely not be able to offer their products at their expected prices. Chan also predicts that the increase in supply could also dampen the growth of home prices in the current quarter.
First quarter home price growth was around 4 percent, that number is expected to slow down to 3 percent in the second quarter because of increased supply. As per the data from the city's Rating and Valuation Department, overall growth is still at acceptable levels given the massive 9.3 percent drop in the fourth quarter of last year.
Despite the increased supply, Hong Kong buyers are still actively buying properties, likely as a result of improved sentiments following the recent stock market rally. Confidence in a possible resolution to the ongoing US-China trade dispute has also played a part in renewed interest in investing in properties.
Data from CGS-CIMB Securities has revealed that the government has already approved the pre-selling of at least 6,000 units in various projects across Hong Kong. This includes 1,172 units at Cullinan West III atop Nam Cheong MTR station in Kowloon developed by Sun Hung Kai Properties. Other approved pre-selling units include 1,408 units at Billion Development's Centra Horizon in Tai Po and 2,000 units at an unnamed project in Tuen Mun developed by China Evergrande. Developers such as Wheelock Properties, Great Eagle Holdings, and CK Asset are all reportedly preparing to release an additional 3,000 units in the coming weeks.
Analysts from CGS-CIMB Securities have stated that now is actually the best time for developers to release their units to the public given the improved sentiments. Major developers in the city had originally held off launching their products in the first quarter while they waited for buyer sentiments to improve.
