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Property News Weekly Digest
2019/5/18
〈China Daily, May 18, 2019〉The government's latest move to take the heat out of the property market may have had an unintended consequence.

In an attempt to raise the supply of affordable housing, the government recently shifted the targeted split between public and private housing to a 70:30 ratio from 60:40 previously.

With desperate home seekers now scrapping over a diminished private market, the plan might have contributed to a rally that had taken prices in the world's most expensive property market to more records, analysts said.

"The intention is good. However, it translates to an even smaller pool of private homes," said Alvin Cheung Chi-wai, associate director at Prudential Brokerage.

"Buyers are having to rush to snap up a unit as they are afraid private home prices will be pushed up as supply will shrink further. The government set the income cap for public housing too low, and not many home seekers can actually benefit."

John Lam, head of the Hong Kong and China property team at UBS Research, said the government's move to raise public housing supply would only be a minor contributor to the upwards trajectory of prices.

"Sentiment has changed mainly because of expectations of macro policies, particularly the slowing of interest rate increases. The ratio change is more indirect to buyers' sentiment," he said.

Hong Kong raised its key interest rate by 25 basis points in June last year, matching a move by the US Federal Reserve.

But since the beginning of the year, the Fed's policy has turned dovish and the market consensus is for no further rises this year.

The income threshold for a couple to qualify for a public rental home is HK$18,690 per month, disqualifying many from applying. As of March 31, more than 250,000 people were on a 5.5-year waiting list.

〈Asian Post, May 17, 2019〉Sun Hung Kai Properties, Hong Kong's largest developer by value, has been prosecuted for allegedly failing to provide sufficient information when selling flats by tender, the first such case in a government bid to target opaque sales practices.

In a press release yesterday, the Sales of First-hand Residential Properties Authority said a summons had been served to an unnamed developer for a project in Pak Shek Kok, Tai Po. A source confirmed the case involved SHKP's project, St Martin.

"The [authority] noticed earlier there were individual cases of first-hand residential developments offered to be sold by way of tender with insufficient transparency in the sales process and the transaction information, which might have contravened the [law]," it said in a statement.

"The developer did not set out full details of the terms of payment in the register of transactions [after selling flats on March 22]."

However, it did not make clear what those details were. The case will be heard at Kwun Tong Court on July 9.

SHKP said it was looking into the allegations, but stressed it "attaches great importance to ensuring sales practice complies with the relevant laws and regulations".

Developers are required by law to list any discounts on the price, gifts, financial advantages, or benefits given for purchases in the "register of transactions", a list which is uploaded to the project's website.

Failure to set out the terms of payment in the register is liable to a fine of HK$500,000.
The register provides the public with transaction information to help people understand local market conditions.

〈China Daily, May 16, 2019〉The cost of luxury homes in Hong Kong edged up just 0.3 per cent in the first quarter as prices globally rose at their slowest pace in a decade, according to figures from Knight Frank.

High-end home prices in 45 cities across the world crept up 1.3 per cent in the first three months of 2019 from a year ago as the US-China trade war and stuttering economies in Europe dampened growth.

Prices in Vancouver registered the poorest performance with a fall of 14.5 per cent. London and New York declined 5 per cent each, while Shanghai lost 4.5 per cent during the period, according to the real estate consultant's prime global cities index released yesterday.

"The last six months saw political and economic headwinds intensify," said Liam Bailey, global head of research at Knight Frank.

"In the first quarter of 2019, the threat of a global trade war loomed, uncertainty surrounding Brexit peaked and the International Monetary Fund projected 70 per cent of the world's economies would see a slowdown in growth in 2019."

He also cited the rising costs of home finance - the United States has seen nine rate increases since December 2015, with a knock-on effect on 13 currencies pegged to the US dollar.

European cities occupied seven of the top 10 spots, with luxury home prices jumping 14 per cent in Berlin, 10 per cent in Frankfurt and 8 per cent each in Edinburgh and Paris.

The index tracks the movement in luxury residential prices of the top 5 per cent of the housing market.

Letizia Garcia Casalino, head of residential services at Colliers International, believed residential property was still a good option for investors globally.

"Although it might be more expensive in some cities like Hong Kong, the return on residential property investment is usually good and steady," she said.

〈China Daily, May 15, 2019〉Average cost of a new house across 70 cities rises 0.62pc in April while the value of sales jumps 14pc, pointing to further increases ahead, analysts say

The cost of new homes rose in almost all of the 70 mainland cities monitored by the government in April, extending a recovery as an easing of purchase restrictions and price control regulations encouraged buyers.

The average cost of a new house increased 0.62 per cent, about the same as the rise in March and higher than the 0.53 per cent gain in February, according to Bloomberg calculations based on National Bureau of Statistics data released yesterday.

"Home prices are entering an upwards trajectory, enabled by an easing in mortgage policy and the unleashing of previously pent-up demand," said Yan Yuejin, a director with E-house China R&D Institute.

"If this trend continues, more cities may upgrade their curbing measures."Prices climbed in 67 out of the 70 cities tracked by the bureau, a jump from 65 and 57 in March and February respectively.

Bucking the trend were Ganzhou in Jiangxi province and Shaoguan in Guangdong, where prices dipped 0.1 per cent. Guilin, in Guangxi, saw home prices unchanged in April.

Property sales volume extended its buoyant performance last month, increasing 1.3 per cent year on year in terms of floor space after a 1.8 per cent gain in March and a 3.6 per cent decline in the first two months of 2019, according to the bureau.

Sales by value jumped 13.9 per cent from a year ago, much faster than the 2.8 per cent seen in the first two months of 2019.

〈The Standard, May 14, 2019〉The Centaline Greater Bay Area Index, which measures residential housing prices in 11 cities in the area, rose 0.32 percent month on month in February to 105.46, marking the end of five consecutive months of declines.

Year on year, prices climbed 3.52 percent from February 2018.

Experts said property markets in the Greater Bay Area may have higher potential for appreciation than in other mainland cities amid increasing housing demand in the area.

Seven cities in the region recorded a slower pace of month-on-month drops in the price index in February - ranging from 0.51 percent to 3.43 percent - while eight cities saw year-on-year improvements.

In Foshan, the housing price index fell 3.43 percent to 130.13 in February compared to January. However, in terms of year-on-year growth rate, the city's housing prices jumped 20.42 percent from February 2018, the fastest among the 11 cities.

Dongguan, Zhongshan and Shenzhen followed, with February prices rising 4.08 percent, 1.69 percent and 1.31 percent, respectively from a year ago.

Zhaoqing and Jiangmen's prices in February grew 3.08 percent and 1.85 percent year on year, but slipped 0.88 percent and 1.29 percent from January.

In February, China released the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area, which guides the development of nine mainland cities and two special administrative regions, and aims at facilitating human resource flows and capital flows in the area.

The blueprint for the Greater Bay Area focused on cities like Guangzhou and Shenzhen, where property prices have soared in recent years. The two local governments have introduced measures to curb surging housing prices, which led to the capital outflows into surrounding regions such as Zhongshan and Huizhou.