Sun Hung Kai halts price war in Yuen Long project, betting rate cuts will lure homebuyers

Sun Hung Kai Properties (SHKP) is putting some of its new flats in Yuen Long for sale at the same price as in the previous launch last quarter, suggesting the city’s home builders expect cheaper borrowing costs will be a big magnet to lure buyers back into the market.

Hong Kong’s biggest developer will put 94 units in Tower Six of the Yoho Hub II project for sale next week at an average price of HK$14,338 per square foot, according to the price list published on Tuesday. That is unchanged from the level when it sold all 423 units in Tower Eight in May.

The firm may be setting an example for industry peers to preserve their margins, after several rounds of discounting through the Covid-19 pandemic to clear their inventories. The Federal Reserve is odds-on to cut its target rate by 25 basis points this week, according to rate traders. The Hong Kong Monetary Authority follows the Fed in lockstep under its linked exchange rate system.

“[Discounting] will depend on supply in particular districts, and those with excess volume will continue to see cuts,” said Martin Wong, senior director and head of research at Knight Frank Greater China. Overall, price cuts would gradually stop as more rate cuts are projected into 2025.”

Sun Hung Kai last slashed its selling price by as much as 28 per cent at the Yuen Long development in May, as developers competed with peers to win customers. A weak economic outlook and borrowing costs at 17-year high have weakened demand as buyers hold out for cheaper prices.