Thursday, 17 September 2015

The Waiting Game Begins

Potential buyers check out Upper East but many have given up down payments
You know the economy is not looking good when potential home buyers are not purchasing homes -- because they think prices will go down even further.

Some buyers have even walked away from deals even though they have put down deposits.

"Developers that require purchasers to put down a small initial down payment will be hit the hardest," said Alvin Cheung Chi-wai, an associate director at Prudential Brokerage. He added buyers would rather cut their losses by forfeiting their deposits if they believe an economic slump is coming.

The media has reported at least 30 such cases so far this month, 11 of which were at Kowloon Development's Upper East project in Hung Hom. Five cancellations were made at Cheung Kong Property Holdings' Beaumont in Tsueng Kwan O, and four at The Aspen Crest in Diamond Hill developed by Far East Consortium International.

One buyer signed an agreement for two flats at Upper East for a total of HK$11.8 million, but gave up the HK$2.55 million initial down payment.

That's a lot of dough, rich or not.

That project has the most number of defaults so far because it required potential buyers to put down payments of just 5 percent. Because of this deal, including a 14 percent discount, it sold 340 units, 40 percent of which were bought by investors this month. Down payments for the cheapest flats -- 194 square feet -- were just HK$150,000.

Kingswood Villas in Tin Shui Wai
The market for luxury and secondary flats was also slow, with sellers cutting prices to entice buyers. A 806 sq ft flat at Pacific Palisades in North Point Hill sold for HK$14.5 million, HK$1 million less than the original asking price.

"This is the first deal for North Point Hill so far this month," said Terry Chan, associate director at Centaline Property Agency.

In Tin Shui Wai, a 546 sq ft flat in Kingswood Villas, the city's most active housing estate in terms of turnover, changed hands for HK$3.92 million, the first unit to be sold for less than HK$4 million in the past few years.

Real estate agents report the secondary market has plunged to a 20-year low.

This is good news for first-time home buyers, but it's a waiting game now, trying to figure out how low prices will go... who's in?

No comments:

Post a Comment