Measure to cool Hong Kong luxury homes market frustrate some buyers
Need for 50pc down payment is deterring big-home purchases, and prices are now falling
Hong Kong businessman Raymond Chiu says he has perfect credit and is prepared to spend about HK$16 million on a 1,000 sq ft apartment in Mid-Levels. There's just one catch. The government requires a 50 per cent down payment.
That's "really putting us off", said Chiu, 45, who owns an information technology consulting company. "I run a business, so cash flow is important. It's frustrating because this is non-negotiable, though I have perfect credit history."
Prices of high-end apartments, defined as those larger than 1,000 sq ft or costing at least HK$10 million, have gained less than the broader market since the second half of last year. Buyers in Chiu's price bracket have been hardest hit after the government raised minimum down payments six times over less than three years as part of curbs to make homes more affordable.
The slowing price growth in high-end apartments is the first sign that efforts to temper rampant speculation that has fuelled a surging housing market are working even as it stings luxury developers and potential homebuyers.
Broker Cushman & Wakefield forecasts that prices of homes valued at more than HK$10 million will fall about 3 per cent in the fourth quarter, extending a 3 per cent drop so far this year, while those selling for less will be little changed.
"The luxury segment has taken the first and the most direct hit," said Buggle Lau, chief analyst at Midland Holdings property agency. "The measures were aimed at driving the speculators away and they have certainly achieved that, but many people wanting to buy for their own use are also affected."
