A flat owner's story

October 18, 2019 12:19
The new mortgage rules, while good news for homebuyers, also prompted many property owners to raise flat prices in anticipation of stronger demand. Photo: HKEJ

Not too many landlords were smiling over the past four months in view of the political unrest that has dealt a telling blow to the property business as a whole.

Take the case of a certain flat owner at Flora Plaza in Sheung Shui.

Three weeks ago, the man sold his two-bedroom flat measuring 392 square feet for HK$5.17 million. However, the buyer failed to complete the deal and walked away after paying a HK$100,000 deposit.

The owner lowered his asking price to HK$5.1 million, but only managed to sell it last Sunday for HK$4.83 million, 6.6 percent lower than his original asking price.

But in a repeat of what happened earlier, the new buyer turned away from the deal after paying a HK$5,000 deposit.

It was a good decision on the part of the buyer because, only a few days after, Chief Executive Carrie Lam Cheng Yuet-ngor relaxed mortgage rules in a bid to make housing more affordable and young Hongkongers feel less disgruntled.

In her policy address on Wednesday, Lam raised the ceiling for a mortgage loan with a cover of 90 percent to HK$8 million from the previous HK$4 million.

The new rule, while good news for homebuyers, also prompted many property owners to raise home prices in anticipation of stronger demand.

The flat owner in our story finally managed to sell his home on Thursday – for HK$5.08 million. Although that's below the HK$5.17 million he originally wanted for the property, he consoled himself with the fact that he was able to get an extra HK$15,000 because of the two walkouts.

Unlike him, though, the big property owners are salivating after hearing the latest policy address because more people will be buying their homes.

Investors believe so, and the share prices of leading developments – most notably New World Development (00017. HK) and Sun Hung Kai Properties (00016.HK) – are on track for a third-day rally. 

However, Lam's policy address provided only a little stimulus to two new residential projects – SHKP's Cullinan West III in Sham Shui Po and CK Asset's (01113.HK) Seaside Sonata in Tsuen Wan. Both developers were only able to clear about half of the first batch of the units they had put up for sale.

After all, property prices are a gauge of the current market sentiment, the people's level of confidence in the economy as a whole. 

Right now, many people are pessimistic about the city's outlook. But when it comes to property, market pundits say, home prices never die, they just sleep for a while.

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EJ Insight writer