The rabid rise in home prices in Hong Kong is leading to a standoff between buyers and sellers, as buyers, seeing the potential in rocketing prices, are holding off selling, while buyers, already scoffing at the prices, are refusing to pay more than what they intended. The result is a standoff between the two sides, with deals slowing down to a halt.
The South China Morning Post profiled a woman by the name of Winnie Cheung, whose housing estate in the Taikoo district of Hong Kong has seen a price increase of 55 percent to HK$7 million (less than $1 million US) in the past two years.
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Sensing further increase, she has backed off her previous goal of trying to sell the place.
“The rapid rise in home prices is a bit crazy,” Cheung told the SCMP.
Cheung and her husband bought a 662 square foot apartment in Taikoo for HK$4.5 million, or HK$6,790 per square foot, in May 2009. She believes the prices will continue to rise, even though the Hong Kong government has recently implemented a move to try to increase supply of apartments in the city.
The plan was announced by Hong Kong’s Chief Executive, Leung Chun-ying, last week.
Leung is in the hot seat himself the past week over Hong Kong citizen’s protests over the implementation of a “national education” course in schools, which citizens believe is nothing more than Mainland Chinese propaganda. Over 120,000 Hong Kong citizens protested last week — most dressed in black — forcing the Leung to back off his plans to back Beijing’s takeover of Hong Kong.
Leung’s housing plan, anyway, includes the sale early next year of 830 Home Ownership Scheme apartments in Tin Shui Wai, a less developed area of Hong Kong, that were put on hold because of a construction problems in 2000; selling 1,000 apartments in the neighborhood near the airport under the My Home Purchase Plan to families earning less median income at a discount; and converting the Chai Wan Factory Estate into public housing to create 180 apartments.
The plan was seen by many as a ploy to draw attention from the hugely negative buzz surrounding Leung.
As a result, no one is listening to his plan much, as homeowners like Cheung are in no hurry to sell or refuse to lower their asking prices because they don’t expect the Leung’s plan to do what Leung claims it will do: make property more affordable in Hong Kong.
This conflicting interests has led to a standoff between both sides, slowing sales to a crawl.
Data from Hong Kong’s property agents shows that sales in the 50 estates that it monitors dropped 14 percent to 297 deals during the week of August 27 to September 2, compared to 344 a week earlier.
“That is a seven-week low. The government measures have cooled market sentiment but owners’ high asking prices are also killing buyer interest,” said Ricacorp director David Chan, to the Post.
Hong Kong’s skyhigh property prices was, arguably, Hong Kong’s biggest problem the past few years. But now, with a Chief Executive that seems to have Beijing’s interests in mind, Hong Kong citizens are not so worried about housing prices anymore, for a bigger threat looms: A communist takeover.