Home Buyers Walk Away

Buyers are more cautions with higher mortgage rates and cooling measures

After 27 consecutive months of house prices rising, buyers finally started having second thoughts. The first half of this year was very strong, with prices going up 13 percent, though people are starting to retreat, even if it means losing hundreds of thousands of dollars in deposits.

St Martin II in Tai Po has had buyers lose their deposits

One buyer who had purchased a HK$7.25 million studio unit in Tai Po, New Territories two weeks ago has now cancelled the purchase and forfeited the 5 percent deposit, or about HK$362,700 (US$46,200).

Five other buyers cancelled their purchases of flats in Yuen Long, which totals HK$2 million in penalties.

There seems to be a gloomy outlook due to banks raising mortgage rates, the ongoing Chinese-US trade war, the inactive stock market, and the Hong Kong government trying to cool the property market.

As a result, some developers have cut prices in the hopes of boosting sales, like Sun Hung Kai with its Cullinan West II development on top of Nam Cheong MTR station. The average price was cut by 10 percent to HK$23,893 per square foot after discounts.

Even Park Yoho Milano in Yuen Long has seen cancellations

"Seeing some developers tag their new flats at a less aggressive level or even lower down the prices, buyers are expecting more cheaper new flats to be put onto the market soon," said Vincent Cheung Kiu-cho, deputy managing director for Asia valuation and advisory services at Colliers International. "The sentiment will last at least a quarter."

But don't pity the property developers -- they are cutting prices by 10 percent and are still making a killing.

UBS has predicted housing prices will drop as much as 10 percent from this month to the end of 2019, while Citibank has forecast a 7 percent fall in the second half of this year.