This Sui Wo Court deal is a success story but it's rare

June 01, 2016 17:59
With perfect timing, a homeowner in Sui Wo Court in Sha Tin has made a tidy profit after selling his HOS flat. Photo: HKEJ

A homeowner has made good profit by selling his Home Ownership Scheme (HOS) flat in Sha Tin at just the right time.

He bought the unit in Sui Wo Court for HK$1.5 million (US$193,000) during the 2008 financial crisis and sold it for HK$3.93 million in June last year when prices were rising.

That left him with a tidy HK$2.43 million gain.

Many homeowners encountered a similar situation during the recent bull market.

Some were tempted by the skyrocketing prices to sell their flats.

However, selling property is easier said than done. It's complicated by how much risk you're willing to take.

In addition, you need perfect timing, courage and good execution.

Hong Kong's housing market has returned to the 1997 peak, with the Centa-City Index at 100 points.

Some homeowners have become renters after selling their flats but they are regretting getting out now that prices are still rising.

Some homeowners who have reentered the market at its peak are finding it hard to make a profit selling their property.

The Sui Wo Court deal is a rare success story.

The owner who now rents a flat in the same estate, recently bought an apartment for HK$3.4 million.

As a renter, his costs are about HK$120,000 a year.

Still, he made a killing in a span of eight years buying and selling his flat. In addition, he could be making interest income from the sale proceeds, assuming he invested the money in an interest-bearing account.

Another homeowner was not as lucky.

He bought his flat in May 2015 for HK$3.9 million and sold it for HK$3.4 million a year later, a loss of HK$500,000.

After paying HK$340,000 in stamp duty, his total loss is about HK$1.03 million.

It’s also the first loss recorded in Sui Wo Court since the financial crisis.

The seller is a financial investor who wanted to cash out to buy another apartment.

Sui Wo Court is one of Hong Kong’s first HOS housing estates.

Built in 1980, it has nine blocks with a total of 3,500 flats. The estate is well known for its high efficiency ratio and good ventilation.

Most transactions take place among residents in the district.

This article appeared in the Hong Kong Economic Journal on June 1.

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Economic Journal columnist