New projects launch at an average discount of 10% over last two months
Fall in Buyers’ Stamp Duty and Double Ad Valorem Stamp Duty implies weakening housing demand
HONG KONG, 29 September 2022 – The first launched prices of the new residential projects released in August and September were averaging 10% below nearby secondary projects due to the interest rates hike. The increasing mortgage rates will likely further weigh on activities in the housing market, according to JLL's Hong Kong Residential Sales Market Monitor released today.
Figures from JLL’s Research department show the first launched prices of the five new residential projects launched in August and September were 7% to 12.6% lower than the average price of secondary projects in the same precinct.
Comparison of primary projects launched in Aug/Sep
|Project||District||Minimum price per sq ft (1st price list)||% compared with secondary projects in the same precinct|
|NOVO LAND (Phase 1A)||Tuen Mun||HKD 12,187||-12.6%|
|ONE INNOVALE • Archway||Fanling||HKD 13,106||-7.0%|
|NOVO LAND (Phase 1B)||Tuen Mun||HKD 12,936||-7.2%|
|Miami Quay I||Kai Tak||HKD 20,339||-11.5%|
Source: JLL Research
Nelson Wong, Executive Director of Research at JLL in Hong Kong, said: “In mid-August, HSBC raised the HIBOR-linked mortgage rate cap by 25 bps. It was the first mortgage rate hike by the bank since the US Federal Reserve began increasing the interest rate and the mortgage rates are expected to rise further. As such, it affected the buying interests of potential buyers.”
The rise in mortgage rates has already cast a shadow on the housing market. Borrowers on HIBOR-linked mortgages have been subject to higher mortgage rates as the HIBOR began to edge up in early 2022. According to the Land Registry, the total consideration of Secondary S&P dropped by 37.2% y-o-y in 2Q22, the largest drop since 2019.
The investment momentum was also weakened. The Inland Revenue Department reported that Buyers’ Stamp Duty amounted to HKD 410 million in 2Q22, the lowest quarterly receipt since the stamp duty was levied. Receipt of the Double Ad Valorem Stamp Duty was HKD 1.33 billion, the second lowest following the lowest level recorded in 1Q22. The low levels of stamp duties receipt are signs of subdued sentiment among both investors and owner-occupiers.
Norry Lee, Senior Director of Projects Strategy and Consultancy Department at JLL, said: "With expectations that the interest rate will continue to rise in the coming quarters, forthcoming primary launches will likely adopt a similar pricing strategy in order to appeal to a dwindling group of prospective buyers.”
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $19.4 billion, operations in over 80 countries and a global workforce of more than 102,000 as of June 30, 2022. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.