Property Market Finally Softening but Still Pricey

Some 96 percent of the units at Cullinan West II were sold this weekend

We never thought we would see this, but developers are starting to lower their prices because of rising interest rates, a slowing economy and a depreciating Chinese currency.

This past weekend Sun Hung Kai Properties dropped the prices of its flats to an average of HK$23,893 per square foot after discounts of up to 20 percent, about 10 percent lower than a previous batch that went on sale in December.

The 364 units ranged from 269 to 1,500 square feet

It's still shocking that people are paying over HK$20K per square foot, but the market was willing to shell out, as SHKP was able to see 96 percent or 350 out of 364 units at Cullinan West II at Nam Cheong MTR station in Kowloon.

"The good turnout means the market still has liquidity. Once developers are willing to lower their selling prices by 5 or 10 percent, it will encourage investors and buyers to quicken their purchase decisions," said Colliers International's deputy managing director Vincent Cheung Kiu-cho.

The developers also offered first-time mortgages of up to 80 percent of the flat's value, much higher than the standard mortgage ceiling of 60 percent of a property valued below HK$10 million (US$1.3 million), and 50 percent for those above HK$10 million.

That's a very good enticement for first-time buyers if they can't make a big down payment.

More than 4,800 prospective buyers bid for 364 units

The flats' areas ranged from 269 to 1,500 square feet, with prices starting at HK$6.28 million. Gulp.

For an indication of the demand, more than 4,800 prospective buyers signed up for the 364 units, an average of 13 bids for each available flat. However, Alfred Lau, an analyst with Bocom International, says the sales response was "satisfactory", and expects developers to offer even bigger discounts soon.

"There are only 364 units in this batch and the pricing was not aggressive in the first place, largely in line with nearby average selling prices," he said.

Some buyers bought more than one unit -- one bought six

"If these units had come in two weeks earlier, they would have sold at the full price. This further confirms the slowing momentum. Developers may need to offer a larger discount if they wish to push the volume."

Some buyers bought more than one flat. In one case, one splurged HK$156 million for six units, five for the family to live in, one to rent out. Another bought three units ranging from 1,200 to 1,500 square feet for a total of HK$120 million.

Still staggering for most of us, but there are others who have money to spend and are looking to snap up some good deals...