Hong Kong homebuyers rushed to buy small flats that kicked off sales over the weekend, underscoring insatiable demand in the world’s priciest property market even as signs of overheating are almost ubiquitous.
At Henderson Land Development’s Cetus.Square Mile project in Mong Kok, all of the 180 flats, with areas ranging from 191 square feet (17.7 square meters) to 417 square feet, were sold on Saturday, according to Midland Realty.
The average price was now 43 per cent higher than when the project was first launched in 2015. The units up for sales this time were valued at a total of HK$1.1 billion (US$140.2 million), with the cheapest unit costing HK$4.41 million and the most expensive at up to HK$9.83 million. Another similar property on offer in Tai Po was also met with enthusiastic response.
“Sales are pretty good and that’s very strong real demand,” said Sammy Po, chief executive at Midland’s residential department.
Hong Kong’s developers are aiming their marketing at millennial buyers – the generation that came of age at the turn of the millennium, now in their mid to late thirties – by rolling out studio flats, after a decade of cheap borrowing has turned the city into the most expensive property market in the world.
A survey conducted by Centaline Property Agency showed that about 70 per cent of tiny flats due to be completed next year had already been sold out as of April.
The era of cheap and easy money will end soon, with the US Federal Reserve likely to raise its benchmark interest rate again this month. That will be followed by the Hong Kong Monetary Authority in lockstep to maintain the local currency’s peg.
Still, that hasn’t dented demand in Hong Kong’s property sales. An index of secondary-market home prices climbed 1.8 per cent in April for the 25th consecutive month, according to data released by the government’s Rating and Valuation Department on Thursday.
Midland Realty’s data showed the land price was now even higher than the city’s average home price, indicating there is probably room for property prices to rise.
The average price for used homes through May 21 this year was already 11 per cent higher than 2017 and the new-home price was 12 per cent pricier.
The price of the Cetus.Square Mile project averaged HK$23,912 per square foot after a 5 per cent discount, and each buyer was limited to purchase of up to two units. The project had registered 3,100 prospective purchasers.
Henderson will offer a mortgage rate of 5 per cent, two percentage points below the prime rate, in the first three years. From the 37th month to the 60th month, the rate will be one percentage point below the prime, and the remaining period is one percentage point higher.
Buyers will just be required to put down an initial deposit of HK$661,000, or an equivalent of the 15 per cent of the value of the cheapest studio flat, under the developer’s financial scheme.
In Tai Po’s Solaria development project, 240 out of the 268 units up for sale had already found buyers as of 7:30pm on Saturday, according to Midland.
Developer K Wah International Holdings offered an average price of HK$18,124 per square foot for the project, in which all 238 flats valued at combined HK$2 billion were sold out in an earlier batch of the first launch a week ago.