While the government’s pledge earlier this year to increase the supply of new residential units has been expected to ease home prices, the US Federal Reserve’s interest rate hike this week could be another blow to the property market.
Price cuts in several residential developments emerged as a knee-jerk reaction to the Fed rate hike in Hong Kong’s property market, which boasts the world’s priciest homes by square foot, Apple Daily reported on Friday.
The owner of a 544-square-foot flat in Kingswood Villas in Tin Shui Wai fired the opening salvo on Thursday night by cutting the asking price for the unit to HK$3.62 million from HK$4.2 million, or 13.8 percent. That brings down the unit price to HK$6,654 per square foot.
The tag price for another flat in the Grandiose in Tseung Kwan O was also trimmed down to HK$5.94 million, about 10 percent lower than the market price and the lowest of its kind this year, from HK$6.5 million, according to property agency Centanet.
The unit was selling for HK$6.8 million in September.
The price for a two-bedroom flat in Kin On Mansion in Taikoo Shing was also cut by HK$1 million to HK$8.5 million.
Estate agents said the property market appeared to have frozen after Fed’s move on Wednesday.
They believe homes prices are likely to go down further as more rate hikes are expected next year.
Even before the Fed rate hike, home prices at the top 10 estates in Hong Kong have fallen 5 to 22 percent from their historical peaks seen several months ago.
Taikoo Shing, for example, has seen its average unit price down 16 percent at HK$14,488 psf this month from a record high of HK$17,301 psf in August.
Tong Man-Leung, who heads the Gale Well Group, said the biggest impact on the city’s property market will come not from the Fed rate hike cycle, which is already widely expected, but from a flood of new supply, which could result in a 10-15 percent fall in home prices.
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