Advertisement
Singapore markets closed
  • Straits Times Index

    3,224.01
    -27.70 (-0.85%)
     
  • Nikkei

    40,343.73
    +175.66 (+0.44%)
     
  • Hang Seng

    16,541.42
    +148.58 (+0.91%)
     
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • Bitcoin USD

    70,479.77
    +933.42 (+1.34%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • Dow

    39,807.37
    +47.29 (+0.12%)
     
  • Nasdaq

    16,379.46
    -20.06 (-0.12%)
     
  • Gold

    2,254.80
    +16.40 (+0.73%)
     
  • Crude Oil

    83.11
    -0.06 (-0.07%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • FTSE Bursa Malaysia

    1,541.40
    +10.80 (+0.71%)
     
  • Jakarta Composite Index

    7,288.81
    -21.28 (-0.29%)
     
  • PSE Index

    6,903.53
    +5.36 (+0.08%)
     

HK property sales down 12% in 2015

Property transactions in Hong Kong dropped 12 percent last year, underscoring concerns of an economic slowdown in one of Asias major financial centres, reported Reuters.

The total number of local sale and purchase agreements received by the Land Registry fell 12.3 percent to 55,982 in 2015, with total consideration for those transactions down 3.9 percent to US$417 billion, according to data from Hong Kongs Rating and Valuation Department.

The Land Registry had earlier reported that sales transactions for January plunged by more than 60 percent.

A major component of individual wealth, property-related businesses account for almost a fifth of Hong Kongs economic output, said global ratings agency Fitch.

ADVERTISEMENT

The middle class is aware that the economic downturn will affect their income, said Wong Leung Sing, Senior Associate Research Director at Centaline Property Agency.

The significant case is HSBC, which stopped increasing salaries. Other big companies will follow so the middle class cut their expenses.

They move from high rent to lower rent or negotiate with their landlords, noted Wong, who does not expect any near-term improvement. They don't want to buy, even if they already had plans to buy.

A major employer in Hong Kong, HSBC imposed a hiring and pay freeze across the bank globally this year in line with an annual cost savings plan of up to US$5 billion by 2017.

Meanwhile, the slower property sales is being reflected in company results.

Hang Lung Properties, for instance, reported that it only sold 63 apartments and several car parking spaces in 2015. As a result, the company saw its profit slump 57 percent.

Investment bank UBS forecasted last month that home prices in Hong Kong will fall by as much as 25 percent by end-2017.

Last week, the Hong Kong Monetary Authority (HKMA) said that a regular survey it conducts showed residential mortgage loans with negative equity, a first since September 2014.

As at end-December, there were 95 loans with negative equity of a combined HK$418 million, of which HK$12 million was unsecured.

Nonetheless, Hong Kong mortgage rates are still stable even as the Hong Kong dollar is pegged to the US dollar and the Fed increased US rates by 0.25 percent late last year.

Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories email romesh@propertyguru.com.sg

More from PropertyGuru:
Expats now living in Phuket, working in Singapore
Govt wont let property market crash: Shanmugam
JTC to launch tender for Tuas South reserve list site
Slower retail sales in Singapore amid growth of multi-channel retail