Hong Kong Luxury Home Deals Triple on Mainland Buyers

By Sophie Leung and Theresa Tang

Oct. 6 (Bloomberg) -- Hong Kong’s luxury home sales almost tripled in September from a month earlier, as mainland Chinese residents flocked to buy flats in the city.

The registered sales of residential units worth more than HK$10 million ($1.3 million) rose to 1,351 from 500 in August, according to Land Registry figures released yesterday. A one- bedroom flat in Kowloon sold for a record HK$24.5 million, Centaline Property Agency Ltd. said last month.

Luxury home prices in Hong Kong climbed as much as 28 percent in the first nine months of the year, as low mortgage costs fueled buying, according to Colliers International Ltd. Prices may rise by between 5 and 10 percent in the next 6 to 12 months, the global real-estate broker said last month.

“The luxury home market is very active,” Buggle Lau, chief analyst at Midland Holdings Ltd., said by phone today. “Capital from the mainland and overseas is contributing.”

There is “enormous liquidity and buying” from Chinese residents, Martin Cubbon, executive director of Swire Pacific Ltd., said Sept. 29.

The aggregate number of homes registered increased to 12,285 from 11,250 in August, the government said on its Web site.

“We probably will see consolidation after home prices, especially luxury apartments, jumped quite a bit, because the market thinks interest rates may have bottomed out,” Credit Suisse analyst Cusson Leung said in a telephone interview.

Mortgage Rates

Mortgage rates in Hong Kong are the lowest in at least 19 years as banks seek to offset slower demand for other types of credit.

Lenders have cut mortgage rates “to such an extent that they might not have given due regard to the reputation risk, interest rate risk and liquidity risk potentially associated with their pricing,” Hong Kong Monetary Authority Deputy Chief Executive Y.K. Choi said Sept. 17.

“Average mortgage rates are going to pick up gradually,” Peter Wong, head of the Hong Kong unit of HSBC Holdings Plc, said in the city last week.

New mortgage loans approved fell 8.2 percent in August from a month earlier to HK$34.2 billion, the HKMA said last month.

Hong Kong home prices may fall in coming months as Chinese investors face a slowdown in lending growth at home, reducing their buying power, said Leung at Credit Suisse. “Mainland investors’ appetite goes along with growth of liquidity in China, which has already showed signs of slowing down,” he said.

Loans in China

China’s banks extended 410.4 billion yuan ($60.1 billion) of local-currency loans in August, up from 355.9 billion yuan in July, according to official figures. New lending in September may fall to a range between 300 billion and 400 billion yuan, China Banking Regulatory Commission Chairman Liu Mingkang said yesterday.

A one-bedroom apartment at the Masterpiece development in Hong Kong’s Kowloon district was bought for HK$30,025 a square foot last month, a record for a property of that type in the city, Centaline said. The home, with space of 816 square feet (75 square meters) was sold for HK$24.5 million.

Hong Kong is the world’s fifth-most expensive residential real estate market, after Monte Carlo, Moscow, London and Tokyo, according to Global Property Guide.

To contact the reporter on this story: Sophie Leung in Hong Kong at sleung59@bloomberg.net