Hong Kong Homes Sell Out. That's Not the Good News You May Think

(Bloomberg) -- Amid all the doom and gloom in Hong Kong’s housing market, there appeared to be a silver lining, when a developer sold all 488 apartments on offer in a single day.

Sino Land Co Ltd. reported the sellout in Kowloon East on Thursday. But the average price of HK$17,500 ($2,241) per square foot was about 20 percent below recent prices for projects in the area, according to Bloomberg Intelligence.

“Developers have to cut prices to attract buyers,” said Patrick Wong, a real estate analyst at Bloomberg Intelligence. In a cooling market, developers must consider “less aggressive pricing,” he said.

So far, Hong Kong’s secondary home prices have fallen 6 percent from an August peak, with Goldman Sachs Group Inc. forecasting a 15 to 20 percent decline over two years as interest rates rise in tandem with the U.S.

Country Garden Holdings Co Ltd. sold just 21 of 110 units on offer at a New Territories project since sales started in late November, despite discounts. Another project, by different developers and featuring some of the city’s smallest apartments, sold only two of 73 units last week.

Hong Kong Homes Sell Out. That's Not the Good News You May Think

Developers could be poised for a challenging year, with more than 30,000 new units going on sale in 2019, the newspaper Oriental Daily estimated, citing its own data. That’s more than double the number sold this year.

After generating HK$5.7 billion ($730 million) from the sale, Sino Land raised the average price for the project’s second batch of units by 4.2 percent, according to the Hong Kong Economic Journal.

©2018 Bloomberg L.P.