This year, the property market has been hit by the epidemic and interest rate hikes, and the financial turmoil has caused a lot of wealth to be evaporated, making it the hardest year for developers to sell their properties.
So far in 2022, only around 9,000 transactions have been recorded in the first-hand market, with the number of transactions falling below 10,000 for the year, a nine-year low of over 40% compared to last year's 17,000 transactions.
In the past, developers have always followed the strategy of opening for sale as soon as they obtain a sales brochure, but with the old stock still intact, it has been difficult to keep up with the turnover.
Information shows that the Lands Department has granted a total of 36 pre-sale consents in 2022 (some of which are for two to three phases), involving 20,554 units, of which only 16 have been sold, involving 8,861 units; the remaining 20 have not yet been put up for sale, involving 11,693 units, mainly in urban areas, accounting for about 57% of the pre-sale units granted during the year.
On the other hand, developers have been active in selling properties in the past year, with a total of 14,584 units approved for pre-sale in 2021, of which 14,166 units have been put up for sale since last year, accounting for 97% of the total.
According to Centaline, Kai Tak, which has been a major supplier of new properties in recent years, has not seen many first-hand transactions this year, with about 683 transactions registered, a year-on-year drop of more than 70%.
At the same time, another 5,687 units were approved for pre-sale in the area between March and October this year, but none of them have been launched yet, with nearly 90% of them coming from the former airport runway area.
This means that the number of new properties ready for sale in Kai Tak accounts for nearly half of the supply of unsold properties in Hong Kong.
One of the largest developments in the region, 15 Seung Fung Road in the Kai Tak runway area, a joint venture between K. Wah, Wheelock Properties and China Overseas, offers a total of 2,138 units and is divided into two phases, each offering 1,017 and 1,121 units, with pre-sale documents obtained in the third quarter of this year.
8 Mu Tai Street, Kai Tak, a 740-unit project developed by Henderson Land, was approved for pre-sale as early as March this year, until the developer announced last month that the project would be named HENLEY PARK, which tends to be marketed as an existing property.
On the other hand, among the first-hand uncompleted flats available for sale in 2022 but not yet sold, there are over 2,800 units from major railway projects.
These include The Opposite House at Ho Man Tin Station, Phase 4A at Wong Chuk Hang Station, The Capitol at LOHAS Park III in Tseung Kwan O and The YOHO Hub Phase C in Yuen Long, providing a total of 2,618 units, making the first-hand market a "railway property" next year.
In response to the massive supply of new developments next year, Centaline Property's Chief Executive Officer, Residential, Mr Chan Wing-kit, said that with over 11,000 unsold units already approved for pre-sale and over 17,000 units on sale, the potential supply of first-hand private properties next year will be at least 28,000 units, equivalent to at least two Taikoo Shing properties.
With a relatively abundant supply of first-hand properties, developers will still be restrained in their pricing next year in order to recover lost ground and recoup their sales, and are expected to sell at a 10% discount to market prices in areas where there is a serious backlog of supply.
He also pointed out that with the gradual recovery of the Hong Kong economy, the United States inflation has cooled and there is more room to slow down the pace of interest rate hikes, which is expected to help the residential property market trading sentiment, the annual first-hand transaction volume of about 16,000 cases, compared with the annual year of about 11,000 cases rebounded by more than 40%.
