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Residential construction at lowest level since
1997
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Jan 24, 2009 |
Construction and completion of private
residential units in Hong Kong last year
slumped to the lowest since records began in
1997, underscoring the severe impact the
global economic decline is having on the
property market.
The latest figures from the Transport and
Housing Bureau show only 8,000 units were
being built by the end of last year, 38 per
cent fewer than the 12,900 units a year
earlier. About 8,800 private project units
were completed last year, down 16 per cent
from 10,500 units in 2007.
However, the gloomy conditions may have a
silver lining, with analysts saying the
property market will benefit from the tight
supply. In the meantime, prices are expected
to continue to drop as the economy
flounders.
Owing to poor market sentiment, developers
slowed the launch of new projects in the
first half of last year. Centaline Property
Agency said only 9,955 units were sold last
year, a drop of 47 per cent from 18,943
units in 2007 and the lowest since 1997.
Alnwick Chan Chi-hing, an executive director
at Knight Frank, said people were hesitant
about buying property, given that
unemployment was rising and the economic
outlook remained uncertain.
"But thanks to the tight supply, developers
are under no pressure to put their units on
sale," Mr Chan said. "A crash in property
prices or a lot of flat owners falling into
negative equity as we saw after the Asian
financial crisis are unlikely to happen
again."
He expects property prices will stabilize in
the third quarter of the year, but said the
market remained unpredictable in the short
term.
About 22,000 units were under construction
in 1997 and 35,300 in 1998. He expects
property prices will decline a further 5 to
10 per cent if the unemployment rate
continues to increase.
Simon Lo Wing-fai, a director at Colliers
International's research and advisory
division, expects property prices will drop
20 per cent this year even with the market
benefiting from limited supply.
By the end of last year, inventory of
completed units reached 10,000 units, up 25
per cent from the 8,000 units at the end of
the third quarter. But Mr Wong said
inventory was still at the lowest level in
eight years.
Charles Chan Chiu-kwok, an executive
director at Savills Valuation and
Professional Services, said tight supply was
the result of developers becoming more
conservative in land acquisitions after
property prices jumped sharply in 2007.
"They worried the property market would
enter a down cycle."
Source: South
China Morning Post |
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