Hong Kong property sales fall 12 pct in 2015, underscore economy fears

Hang Lung Properties

04/02/2016 07:06

By Clare Baldwin 
    HONG KONG, Feb 4 (Reuters) - Hong Kong property transactions 
fell 12 percent in 2015, government data showed on Thursday, 
underscoring fears about an economic slowdown in the Asia 
financial centre even as it faces a growing drag from cooling 
activity in China. 
    Hong Kong's property prices remain among the highest in the 
world, although they have eased since September and analysts 
expect a further decline this year.  
    Property-related businesses account for nearly a fifth of 
the city's economic output and are a major component of 
individual wealth, according to ratings agency Fitch.  
    The total number of domestic sale and purchase agreements 
received by the Land Registry last year fell 12.3 percent to 
55,982, according to data from Hong Kong's Rating and Valuation 
Department. 
    The total consideration for those transactions fell 3.9 
percent to $417 billion. 
    Sales transactions for January showed a decline of more than 
60 percent, the Land Registry reported this week.  
    "The middle class is aware that the economic downturn will 
affect their income," said Centaline Property Agency senior 
associate research director Wong Leung Sing. 
    "The significant case is HSBC, which stopped increasing 
salaries. Other big companies will follow so the middle class 
cut their expenses." 
    "They move from high rent to lower rent or negotiate with 
their landlords," said Wong, who doesn't see any near-term 
improvement. "They don't want to buy, even if they already had 
plans to buy." 
    HSBC is a major employer in Hong Kong. It is imposing a 
hiring and pay freeze across the bank globally this year as it 
pushes through plans for annual cost savings of up to $5 billion 
by 2017. ID:nL8N15G0XD  
    Slower sales are showing up in company results. 
    Hang Lung Properties Ltd  0101.HK , which reported full-year 
2015 earnings last week, said it had sold just 63 apartments and 
some car parking spaces last year.  
    Its profit plunged 57 percent and its chairman said he does 
not see a bottom to China's economic weakness.  urn:newsml:reuters.com:*:nL3N15C3KG 
    Investment bank UBS forecast earlier last month that Hong 
Kong home prices would fall by as much as a quarter by the end 
of 2017.      
    The Hong Kong Monetary Authority (HKMA) last week said a 
regular survey it conducts was showing residential mortgage 
loans with negative equity for the first time since Sept. 2014. 
    As of the end of December, there were 95 loans with negative 
equity of a combined HK$418 million, HK$12 million of which was 
unsecured.   
    So far, Hong Kong mortgage rates have remained stable 
despite the fact that the Hong Kong dollar is pegged to the U.S. 
dollar and the Fed at the end of last year hiked U.S. rates by 
0.25 percent. 
    Hong Kong Financial Services and Treasury Secretary KC Chan 
said in January that despite the rate hike, retail property 
demand was continuing to outstrip supply.   
    From a year earlier, the economy expanded 2.3 percent in the 
third quarter, slower than 2.8 percent growth in the second 
quarter. 
 
 
 (Reporting by Clare Baldwin; Additional reporting by Joy Leung; 
Editing by Kim Coghill) 
 ((Clare.Baldwin@thomsonreuters.com; + 852 2843 6571; Reuters 
Messaging: clare.baldwin.thomsonreuters@reuters.net)) 
 
Keywords: HONGKONG ECONOMY/