Jiahua: One hand is difficult to see the price tide

Ka Wah (00173) believes that under the current low market sentiment, even if developers are willing to cut prices, they may not be able to attract buyers to the market. In addition, the cost of land is high, and it is difficult to sell at low prices. Price tide.

Wen Weiming, general manager of Ka Wah International Business and Market Planning (Hong Kong real estate) said in an interview that the recent major adjustments in the property market, the most important factor is the Sino-US trade war, which affects the business operations of some manufacturers, regardless of the strength of investors and ordinary use. The family did not dare to enter the market.

Low price promotion, low return

In contrast, the impact of interest rate hikes, he said: “The United States has started to raise interest rates since 2015. The rate hike has reached 1.25%. However, during the period, Hong Kong banks only added 0.125% interest rate, which may slow the pace of interest rate hikes. The factor of raising interest rates has little effect on the property market."

He believes that under the current market conditions, developers are facing a dilemma. The first is whether the real estate should follow the market adjustment and reduce the price, and secondly, whether the price reduction is effective to stimulate sales.

Based on the good economic fundamentals of Hong Kong, the unemployment rate has remained at a historical low of 2.8%. The affordability of the public is still strong. It is only because of the strong wait-and-see attitude in the market. The desire to enter the market is not high. Even if the developers are willing to cut prices, buyers may not be allowed to enter the market.

“Furthermore, the current cost of land is high. It is not easy to increase the land reserve. The latest land price of Kai Tak in the Kai Tak residential area is over $15,000. If the construction cost plus interest is calculated, the total cost will be 25,000 at any time. Therefore, even if the new price is reduced or sold at a low price, the funds that the developer has cashed in may not be enough to invest again." He said

The group has sufficient funds, no intention to sell at a reduced price.

He said that unless there is pressure on individual developers’ funds, they need to reduce their prices. In view of the fact that the Group is well-funded and has little pressure, its properties are not intended to be reduced.

He believes that this adjustment period will last for half a year. After the Lunar New Year holiday next year, the purchasing power will begin to reappear. After the Sino-US trade war is gradually becoming clear, the property market will be active again after about 3 or 4 months. .

Wen Weiming expects that the current property market will fall by about 5 to 10%, and will not make a major adjustment. “Or if one or two large new flats are launched in the urban area, it is expected to “explode" the overall market."