Well over three quarters of new flats that went on sale in Tsuen Wan on Sunday were snapped up, as an interest-rate cut bolstered demand in Hong Kong’s downbeat property market.
Billion Development & Project Management sold 145 of the 172 apartments in the third batch at The Aurora project, on the western side of the New Territories.
It marked a third weekend of successful sales at the development, after some steep discounts saw all units sold out in the first two batches in August.
Flats in the latest tranche were being offered at an average of HK$19,794 per square foot, bringing them roughly back in line with prices of comparable flats in the neighbourhood. The price is about the same, if not slightly lower, than second-hand flats on the market at Vision City and Chelsea Court, both located in Tsuen Wan.
Studio apartments and one-bedroom flats were most in demand, according to Sammy Po Siu-ming, chief executive of real estate brokerage Midland Realty’s residential division.
He said that indicated a strong demand from first-home buyers.
Last week’s interest rate cut by the US Federal Reserve helped boost buyers’ confidence in the project, according to Ringo Leung, sales director for Tsuen Wan at Midland Realty.
For some, the possibility of lower mortgage payments has made buying more attractive than renting a property.
“The interest rate cut worldwide is quite decisive for the housing market’s direction,” said Leung. “If the flats’ prices are near what buyers want, they will consider buying them, as rents [elsewhere] will be more or less the same as [mortgage payments].”
Leung said developers would be increasingly inclined to offer sweeteners such as more flexible payment terms and “less ambitious” pricing to sell flats in the current market.
Housing sentiment has taken a hammering from more than three months of civil unrest that has rattled Hong Kong, deterring visitors and damaging the city’s international reputation.
On Wednesday the Fed announced it would cut interest rates by 25 basis points. Hong Kong’s monetary authority followed suit and cut its base lending rate for the second time this year, by 25 basis points to 2.25 per cent, reducing the cost of money.
All three of the city’s note-issuing banks – HSBC, Bank of China Hong Kong and Standard Chartered Bank – have so far kept their prime lending rate unchanged.
Still, Midland Realty’s Po told the Post at the time that the interest-rate environment remains benign for a property market that has seen used home prices drop by 1.8 per cent between July and September 8.
The city’s economy is under pressure from the US-China trade war, now well into its second year, and the ongoing pro-democracy protests that have deterred visitors, hit retail sales and caused property prices to plunge.
Financial secretary Paul Chan Mo-po recently warned of a possible recession in the July-September quarter, and downgraded the government’s gross domestic product growth forecast for the year to anywhere between 0 and 1 per cent, from 2-3 per cent previously.
The first two batches of apartments sold at The Aurora – numbering 354 and 216 – sold out in two separate sales over consecutive weekends in August. The development comprises 840 units in total, and before this Sunday had already pulled in sales revenues of HK$4.8 billion.
The successful sales have bucked the trend in an otherwise generally downbeat mood in Hong Kong, and is largely down Billion Development offering some of the lowest prices in the district.
The first batch was discounted by 10 per cent to prevailing prices in the neighbourhood, while the second lot was 7.4 per cent higher than that.
Property transactions in Hong Kong registered with the Land Registry in June and July fell 29 per cent to 12,591 from the same two months last year.
Additional reporting by Ka-Sing Lam
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