Hong Kong’s apartment hunters find cause for pause in bearish forecast and pending rate rise

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Potential buyers line up at the sales office for the second round of sale of Victoria Skye at One Pacific Centre in Kwun Tong. Hong Kong’s voracious apartment buyers appear to be taking a breather with the third batch of Victoria Skye as a bank forecast of collapsing property prices and rising mortgage rates weigh on buyers. Photo: Jonathan Wong

Published: 7:54pm, 11 Jun 2017Updated: 10:58pm, 11 Jun 2017

Hong Kong’s voracious apartment investors appear to be taking a breather as a Deutsche Bank forecast of collapsing property prices and this week’s expected interest rate increase in the United States are finally beginning to weigh on buyers to give them cause for pause.

A mere 80 units were transacted as of 6pm on Sunday out of the 206 offered in the third batch of apartments at Victoria Skye, developed by K&K Properties at the old Kai Tak airport site in Kowloon, even though 2,300 buyers had registered their interest. The first lots to sell were the smallest units that involved the least upfront payment, agents said.

“Most one- to two-bedroom apartments that involve smaller lump-sum payments were sold out first,” Midland Realty’s residential chief executive Sammy Po Siu-ming said. “Larger flats with higher prices will take more time for decisions [to be made].”

Hong Kong’s residential property prices, already the world’s highest by square footage, will likely decline by nearly half over the next 10 years as a rapidly ageing population combines with a rising supply of new apartments to dent demand, according to Deutsche Bank’s report last week.

The Federal Reserve has signalled it will raise rates during its June 14 meeting, an action that will be followed in Hong Kong to keep the city’s monetary policy in lockstep with US policies.

Hong Kong’s largest banks including HSBC Holdings and Standard Chartered already raised their mortgage rates last month by 10 basis points to 1.4 percentage points above the Hong Kong interbank offered rate.