HK property sector putting brake on sales

Government campaign to control prices badly hurting demand.

Centaline Property Agency Ltd. and Bocom International Holdings Company said the Hong Kong property sector will curb home sales for the rest of the year since government regulations to arrest prices have drastically reduced demand.

Developers decided to go slow on sales after property transactions sank to a two-decade low in the second quarter because of a doubling of stamp duties on buyers and sellers, among other measures. Home prices have fallen 2% from a historic high in March after more than doubling since early 2009.

Bocom International said the pace of sales will remain slow unless there’s something encouraging developers to turn over assets faster. It noted property agents have little incentive to sell at a time when the market’s down.

Centaline noted that builders including Sun Hung Kai Properties Ltd. and Cheung Kong Holdings Ltd. sold 4,320 new units for US$5.2 billion in the first half, both the lowest since the second half of 2008.

Concerns that more curbs will be introduced and expectations that interest rates will begin rising could send home prices plummeting as much as 10% in the second half, said Midland Holdings Ltd.

Centaline said all the measures to curb activities are negating whatever the government is trying to do to accelerate sales.