The Lunar New Year holiday has just passed, and the property market has remained sluggish during this period. The top ten housing estates were recorded zero transactions by two major agency firms during this holiday, resulting in a record high ever since. Hong Kong is in the amid of Fengshui from eighth to ninth fortunes, the weaken property market has been initially confirmed to this changing.
Property developers prefer to promote new projects to attract the public attention during Lunar Ne
w Year holiday as usual, hoping a brand-new project to boost the property prices. However, the sales premises of this year are the remaining flats of new projects. The sales results of these flats do not yield any negative effects to their major yearly sales plan.
Different property developers have their own planning. Each one of them hopes a pioneer developer will launch sales of a new project to assess the bottom line of the market. If a new project is welcomed by the public, the other developers will immediately follow to sell their project with the same marketing and pricing strategy so that they may capture the purchasers from the limited customer base.
Under this stagnant market atmosphere, developers have no other choices. They must reduce the sales price to attract customers. The price-reduction of 20% or more is inevitable. At the beginning of next week, the pioneers' developer will take the initial strike by reducing the sales prices of new projects. Under this sluggish market, it is not strange that the new properties will be launched for sale at the same prices of the second-hand properties in the same district.
When the predatory pricing of first-hand properties begins, there will be greater pressure to reduce asking prices for second-hand properties' landlords. In consequence, the asking prices of second-hand properties will certainly be reduced by more than 10% immediately. If this happens, it will trigger a quicker downward adjustment.
The public anticipates that the government will completely withdraw spicy measures to rescue the property market. If the new fiscal budget that is scheduled to be announced on February 28 does cancel these measures, the property market will rebound and resume its upward trajectory.
Indeed, fresh evidence indicates that the government has no intention of completely removing the spicy measures. Even if it is completely withdrawn, for example, by abolishing the two-years lock-up period, it will only cause more negative-equity properties to be placed in listing for sale. Furthermore, the cancellation of the additional tax to purchase a second home will not attract the investors to return the market either. If the budget ends with just minor changes, the public will be disappointed again, and the expectation of market recovery will not emerge. As a result, property prices will undergo a further decline.
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