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Hong Kong Housing Bubble Suffers Spectacular Collapse As Sales Plunge 42% To Record Low
Over the weekend we reported that in the aftermath of China's crackdown on capital controls, "Chinese buyers have left the U.S. housing market." But if potential Chinese buyers are unable to transfer funds out of the mainland, it wouldn't be just the U.S. and Australia where the housing bubble is now rapidly bursting, it would be everywhere else too as said potential buyers hunker down and instead scramble to avoid the government's attention and to preserve dry powder.
Sure enough, nowehere was this more clear overnight than in Hong Kong, where the once-upon-a-time raging housing bubble just got its last rites after November home sales sank to a record low as an imminent interest rate in the US this month scared away prospective buyers.
According to Land Registry data, reported by SCMP, November saw 2,826 registered residential transactions, down 14.4% from October and 41.7% less than in November last year. This was the lowest print in the history of the series.
In terms of value, residential transactions dropped 7.7% month on month to HK$20.8 billion.
“Total home sales including those in primary and the secondary market dropped to the lowest level since we have started to gauge property transactions in 1996,” said Wong Leung-sing, an associate director of research at Centaline Property Agency.
As cited by SCMP, he said prospective buyers in general held back their purchases in view of softening home prices and a potential rate hike also dented interest. Given the peg of the Hong Kong dollar to the US dollar, any increase in interest rates in Washington would impact the home market here. “Sales volume in the secondary market fell for the fourth straight month to a 20-year low,” Wong said.
That... and not to mention the whole Chinese economy grinding to a halt while severely limiting capital flows to avoid further uncontrolled devaluation of its currency.
Hong Kong home prices fell 4.5 per cent after peaking in September, according to the Centa-City Leading Index, but was still up 6 per cent from the beginning of the year. Last week, 20 out of 50 housing estates monitored by Ricacorp Properties recorded zero transactions.
The weakness was sharp and widespread: sales of new homes also declined to a three-month low, said Centaline. In the primary residential market, the number of home sales also declined 26.4 per cent month on month to 1,023 last month, according to Centaline. The total value reached HK$8.97 billion, down 15.4 per cent from October’s HK$10.6 billion.
Local analysts, perhaps unwilling to accept the reality, remain optimistic:
“The fall in transaction volume and value for new home sales due to an absence of big project launches early last month,” said Derek Chan, head of research at Ricacorp Properties.
He expects to see an obvious increase in sales of new homes this month given more major projects are due to be offered for pre-sale.
“Most of new projects launches will focus in the western New Territories ,” he said.
Optimism is good. But in the meantime, it will have to overcome a surge in supply: in the upcoming weekend, more than 570 units in four new projects are due to be offered for sale. They are 238 units in the second round of Cheung Kong Property’s Yuccie Square in Yuen Long, Sun Hung Kai Properties will kick off the sale of the first batch of 269 units at Park Vista in the same area, Henderson Land Development will put 38 units at The Zutten in To Kwa Wan while Chinachem Group will release 33 houses and villas in Tuen Mun.
If and when this global housing luxury weakness mostly due to the withdrawal of the Chinese marginal "hot money" buyer crosses back into the Chinese border, all bets about the so-called tepid Chinese economic will be off, and since it will be just the moment when China resumes cutting rates, devaluaing its currency and maybe even officially (as opposed to the ongoing unofficial iterations) launching QE, that will be when one should buy commodities, as China does everything in its power to keep the house of $30 trillion in cards from toppling and sending a deflationary tsunami around the entire world.
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Hello! can we say the word "denial" when investers see the bubble and refuse to acknowledge it? Reminds me of the people lining up in vegas to flip houses even when the bubble popped here months earlier.
The word "denial" is reserved for situations like one Syed Farook.
It's starting to crack here in Florida as well, I have two housing related businesses so I keep a close eye on it and let me get this on the table right now.........fuck you if you don't like that.
I can't say I'm Unhappy.
Here are some signs of a coming recession.
1. Factory orders continue to drop
http://www.zerohedge.com/news/2015-10-02/us-factory-orders-flash-recession-warning-drop-yoy-10th-month-row
2. Default risk spikes
http://www.zerohedge.com/news/2015-10-02/us-financials-default-risk-spikes-2-year-high
3. M&A set record
http://michaelekelley.com/2015/05/29/mergers-and-acquisitions-set-record/
4. Fed sees 2 bubbles
http://michaelekelley.com/2015/02/20/fed-warns-of-two-bubbles/
o Commercial Property higher than pre-2007 level.
http://nreionline.com/finance-investment/cre-prices-are-now-officially-above-pre-recession-peak
o Global Corporate Debt Market hits $5 trillion.
http://fn.dealogic.com/fn/DCMRank.htm
5. Iron ore prices tumble
http://www.marketwatch.com/story/iron-ore-prices-keep-crashing-adding-to-global-growth-fears-2015-11-30
6. Baltic dry shipping index tumbles
http://www.marketwatch.com/story/shipping-index-falls-to-all-time-low-stoking-fears-about-global-growth-2015-11-19
Here is how to prepare.
http://michaelekelley.com/2014/10/16/8-things-to-do-when-recession-happens/
Here is how to get your mind off this stuff.
http://michaelekelley.com/category/humor/
Good luck!
Where were you been?! The recession is already here.
ALL of this craziness over a damn lousy 0.25% (if even that) and no one knows if the
Fed is even going to raise the rate?!? Seriously????
Things be gettin real!
Rich Hong Kong Buyer- "Janet Wellen. You stupid white eye. I fuck you. I thlow my flied lice in you face. I lape you asshole. So hard lah."
I'm surprised these Chinese English stereotypes don't die. Most buyers in Hong Kong were mainlnd Chinese who don't speak a word of fucking English, and the Cantonese who speak English are mostly graduates of top int'l schools who speak better English than you and me both.
But if it makes you feel better to keep writing this dumbass sum ting wong horseshit, knock yourself out.
SMH.
Fuck off. I lived and grew up in Southeast Asia. If you'd lived there you would have picked up on the use of "lah". Which is common in Hong Kong, Singapore, etc.
Get a sense of humor and take your American Nazi PC shit elsewhere. Some of us have lived overseas, consider ourselves international citizens, and can have fun making fun of each others stereotypes. Send your kids overseas to an international school so they don't grow up with a giant PC dick in their ass like you did.
Those stereotypes always come from a low IQ person who has never been to China.
Data point lower than 2008 housing collapse in US! I realize they are half way around the globe from each other, but still seems like a harbinger of bad shit......everywhere.
The FED is playing chicken in blindfold.
It isn't about a measly quarter point rate hike, it's about the rats jumping ship. All of the bigwigs have been quietly, carefully closing and redeeming hedge funds. Unwinding of positions, liquidity drying up, warning signs flashing and alarms ringing...something big is afoot, but I can't quite get a clear read on it.
Nice headline, but we're actually waiting for prices to collapse, not just sales volume.
"Completely sold out" as per CNBS.
I wonder what words ZH headlines will feature when things really do crash given they've already maxed out all English superlatives in the dictionary.
don't worry, ZH will be just as speechless if and when it actually happens
This will have a Domino Effect on Hongcouver, BC.
How do you say Schadenfreude in Canadian?
Schadenfreud-eh?
Let's not forgot the Chinese government halted sales of some stocks for six months, so we will see what happens when/ if they start to let them sell (if we make it that far).
Bubbles in real estate and stock prices are fundamentally unhealthy. When the revert to the mean (collapse), that is healthy, not the end of the world. Hong Kong, Shanghai, and Beijing house prices do not represent China any more than Park Avenue in NYC or the Bay Area of San Francisco represent Ameerica. In second tier cities like the one where I live. prices are slowly rising, new homes are being built and sold, life is good.
ZH needs the drama.