Hong Kong residential market in chaos, warns analyst

New-high ASPs were recorded in New Territories secondary estates.

According to Maybank Kim Eng, over the weekend, primary residential market recorded a flattish 30 unit transactions, with The Reach (Yuen Long, developed by Henderson Land) leading the list with 19 transactions.

Here's more from Maybank Kim Eng:

According to local press, approx. 400 of the 650 launched units were sold, affected by the new policies on curbing property market announced on October 27th.

On the secondary market, 14 unit transactions were recorded from the top 10 secondary estates, up 40% WoW but still way below YTD average of 30 weekly transactions.

Implication: We believe that the market is still digesting the introduction of Buyers’ Stamp Duty (BSD) and extension of Special Stamp Duty (SSD) announced by the government end last month.

The market is in chaos, in our view, demonstrated by the selected new-high ASPs recorded in New Territories secondary estates, and selected price cuts from Hong Kong secondary units in mid-high-end projects. The sales of some car-park bays also attracted much media attention last week.

We expect the local developer sector will continue to underperform the market in the short-run, with the wait-and-see approach adopted by buyers and sellers in the secondary market.

The major swing factor will be the launching pipeline and price by major projects in the remainder of 4Q12, including Tsuen Wan West Station development and One West Kowloon (Cheung Sha Wan) by Cheung Kong (1, NR), Riva (Yuen Long) and The Wings Phase 2 (Tseung Kwan O) by SHK Properties (16, NR), The High Point (Shamshuipo) by Henderson Land and Ocean One (Yau Tong) by Lai Sun Development (488).