Mass residential luxury apartments on Hong Kong Island. The value of home sales in November was HK$35.8 billion. Mike Clarke / AFP

Land Registry figures show that transactions by value down 39%

Local property sales in November registered severe year-on-year declines of nearly 64 percent in volume terms and 39 percent in total value, government data shows.

According to the Land Registry data released on Friday, there were 4,795 residential flats sold in the city in November, registering a decline of 63.6 percent compared with November 2010. The value of home sales was HK$35.8 billion, a slump of 39.2 percent from a year ago.

"The levy of the special stamp duty (SSD), the mortgage rate hike and the current unstable macroeconomic situation are deterring local residents from purchasing homes," said Buggle Lau, chief analyst at Midland Realty.

In order to curb soaring home prices of nearly 70 percent since 2009, the government in November 2010 introduced a three-tier SSD which forced home-buyers to pay an extra stamp duty of 15 percent if they resell their homes within six months of purchase. The 10 percent rate would apply if the property is resold within six to 12 months, and 5 percent on sales between one to two years.

The government also raised minimum down-payment requirements and boosted land sales to counteract the city's soaring home prices.

Meanwhile, local mortgage rates are also exhibiting rising trends as local banks' cost of funding is being pushed up due to the rising loans-to-deposits ratio among local banks.

Local major mortgage loan providers such as Bank of China (Hong Kong) and Standard Chartered Hong Kong just kick-started the sixth round of mortgage rate hikes in the city.

Market sentiment in the local home market has also been marred by the economic woes that the Europe and the US are experiencing, which are threatening Hong Kong's exports.

"I predict the market demand in the second-hand market will remain sluggish before the Lunar New Year," Lau said.

Other property analysts are more optimistic that local home sales and transaction volume will rebound next year.

"The recent reserve requirement ratio cut by the central government may inject more liquidity in local banking sector. That may help stabilize local home prices and transactions," said Patrick Chow, research head at the Ricacorp Properties. "The local mortgage rate hike pace may become more gradual, also helping to stabilize the market."

Chow projected that home sales by volume will rebound by 10 to 20 percent in the first half of 2012 from recent low levels position. Home price will also remain stable, he added.

City home prices at the end of November have fallen by around 2.7 percent from their peaks registered earlier this year to their lowest level in more than six months.

oswald@chinadailyhk.com

China Daily

(HK Edition 12/03/2011 page2)