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Residential property sales in Hong Kong up over 40% month on month in December
Residential property sales in Hong Kong rebounded in December, up 43.1% from the previous month, according to data from the land registry. A total of 2,153 primary residential sales transactions were recorded, more than doubling those in November, while secondary home sales increased 6.4%. The data also shows that in December, over half of new home sales involved three major developments: Capri in Tseung Kwan O, The Bloomsway in Tuen Mun and Yuccie Square in Yuen Long. The latest monthly Hong Kong review report from international real estate firm Knight Frank points out, however, that total residential sales volume for 2015 was still down 12.3% from 2014, with primary sales dropping only 0.2% and secondary sales losing 16.6%. The report suggests that both landlords and buyers held a wait and see attitude amid various uncertainties in both local and external markets. The housing supply target in the coming 10 years was reduced from 480,000 to 460,000 units, according to the Transport and Housing Department, as the projected number of new households during the period was less than previously forecast. ‘With the US interest rate hike and a projected increase in housing supply, home prices are expected to come under pressure this year. We expect luxury home prices to fall up to 5%, while mass residential prices could decrease by 5% to 10%,’ the report says. When it comes to the office market, the report explains that, facilitated by various policies to enhance cross border financial integration, mainland Chinese financial firms expanded rapidly in Hong Kong’s CBD, driving up Grade-A office rents in Central by as much as 13.7% in 2015. In December, for instance, a Mainland firm secured a 14,773 square foot office space in Cheung Kong Center in Central and Kowloon East continued to see robust leasing activity, with many companies relocating from Hong Kong Island and other business districts to the area, attracted by the abundant supply of cost effective new space. The Knight Frank report suggest that in 2016 landlords will face pressure in rental negotiations as they compete for tenants to drive down vacancies. This comes on the back of a year in which the office sales market improved, with the total volume and value of transactions rising 21.7% and 49.6% respectively, driven by increased demand from both investors and owner-occupiers seeking to reduce rental costs. However, the report point out that some Mainland firms which had actively taken up Grade-A office space run into various problems. For example, some delayed renovating the space they had let, while others failed to take up the units at the start of the lease term. There were even cases of firms exiting their Hong Kong business. ‘However, with limited supply in core business areas, we still expect their vacancy rates to remain low and their rents to rise by 5% this year. In decentralised areas, however, rents could drop by up to 5% in 2016,’ the report adds. In the retail… Continue reading
People staying in their first home longer due to costs of moving up the housing ladder
Some 37% of first time buyers in the UK are staying in their first property for longer than planned despite improvements in wages in real terms, according to new research. The situation is most acute in London where 49% had not bought a second property within the timescales they had initially intended, the survey from Clydesdale and Yorkshire Banks shows. This is in contrast to the East of England where only 23% of first time home owners had stayed in their property longer than they had expected. The research also found that first time buyers plan to stay in their first home for an average of seven years and nine months although a quarter plan to stay for more than 10 years. Those in the North East plan to stay in their first property for the longest length of time at almost 11 years whilst first time buyers in London have hopes of moving up the property ladder after six years and three months. ‘The step between the first and second property remains a challenge for some and increasing moving costs are also adding to the difficulty of raising a sufficient deposit to afford a larger home,’ said Steve Fletcher, director of retail banking. Clydesdale and Yorkshire Banks have launched a new mortgage to help these kind of borrowers who are struggling to take the next step up the property ladder. The Home Mover Mortgage allows borrowing between 90% and 95% LTV. It comes with a three year fixed rate of 4.49% and is designed to support those who can afford larger mortgage payments but are struggling to save the required deposit. The Clydesdale and Yorkshire Banks Home Mover Mortgage comes with no arrangement fee and one free standard valuation. Continue reading
House prices in Scotland up twice the rate of England and Wales
House price growth in Scotland is outpacing that seen in England and Wales with values up 0.8% in November, twice the rate seen in the rest of the UK. This takes the average price of a home in Scotland to £169,850, up 2.4% compared wot November 2014, according to the latest index from Your Move. East Renfrewshire had the biggest upswing as new home developments lifted prices 5.2% since October and overall it was the strongest November for home sales since 2007 with transactions up 13% year on year. According to Christine Campbell, Your Move managing director in Scotland, the rise provides a welcome bounce back for home owners after a turbulent year but house prices are still below March’s record peak. The driving force behind this up and down has been the introduction of the Land and Buildings Transaction Tax (LBTT) last April which while lowering tax for the vast majority of buyers has hit the top end of the market. However, as high end housing stock starts to shift again, price rises are strengthening in more expensive areas but Campbell warned that the growth spurt may be short lived with the 3% surcharge on second home and buy to let property purchases coming into force in April. ‘If the impact of this tax increase mirrors the effect of the LBTT, we may see a sharp spike in values at the start of 2016 as buy to let buyers rush to avoid the tax hike, followed by a sudden dip after its introduction,’ said Campbell. ‘Investors may well be dissuaded from purchasing additional properties then, with a £250,000 home liable for an extra £7,500 in Stamp Duty once the tax is implemented. Sellers may find themselves having to subsequently reduce prices to make their properties more attractive, accounting for the higher surcharge for some buyers. There have been cases of some developers offering £10,000 contributions towards the LBTT in order to sell their units,’ she explained. The data also shows that on the back of strong monthly growth in October, East Lothian has now overtaken Inverclyde as the mainland region with the highest annual increase in property prices at 10.9%. ‘This region illustrates the recovery in the top end of the market with 30 sales of properties worth over half a million pounds in the last three months, a significant improvement on 18 sales in the same period last year,’ said Campbell. ‘The most notable of the sales was a nine bedroom property going for £2.6 million, the second most expensive property sold this year. This marks a clear turning point when you consider the drought of million pound home sales immediately after the introduction of the LBTT,’ she pointed out. She also explained that November’s home sales have defied the odds by avoiding the usual seasonal slowdown. Transactions increased 1.2% month on month in a period where there is usually see a 4% dip. South… Continue reading
