Some thing happen to small cost unit suit to first housing; Buyers possibly did not pass the interest rising stress test.
Kong Wen Wei Po News (By Leong Yuet Kam and Leong Wai Chung)
In recent months, stock market is unrest and property market is affected. First hand property transaction default and second hand property price falling become more and more. Before US interest rate discussing meeting on tomorrow and day after tomorrow, Hung Hom first hand property Upper East that mainly supplies small size units had 11 defaults yesterday, which is the first hand property project having the most defaults in recent years and also after this stock market crash, and developer took in deposit at about HKD 2.55 million. Insider believed, it is because some first housing people did not pass banking stress test on interest rising by 3% and were forced to default under situation that Hong Kong Monetary Authority requires banking tightening mortgage approvals. Owners and property market investors guess it might be the sign that Hong Kong property market is simmering.
Upper East pre-sale term although is up to 35 months, with one floor has 36 units, but the unit area is small to 197 sq ft, besides mortgage is up to 95% including secondary mortgage, leading the lowest price is less than HKD 3 million after discount, thus more than 300 units were sold on 5th this month when was the first sale day. However, according to yesterday first hand property transaction data, this project had 11 defaults, which value at totally HKD 50.98 million, and developer took in deposit at about HKD 2.55 million calculating it is 5% of the property price, making it the new project having the most defaults in recent years and after stock market crash.
6 units are sold again. New arrivals gain more than 1,000 registrations tomorrow night.
Some among these 11 defaults are real but some occurred because buyer want to change into other units, besides 6 units among were sold at original price yesterday, and he is still confidence of the 242 units which will be put on sale tomorrow night, which have gained more than 1,000 registrations above 3.1 times of quota until last night, there into more than 100 groups customers want to buy two units, and the registration has closed 2 pm today, developer Kowloon Development marketing and sale department general manager Yang Chung Wing expressed when accepting inquiry yesterday.
According to transaction record, these 11 units are located in high, medium and low floor of block 1B and 1C in usable areas from 197 sq ft to 362 sq ft and at transaction prices from HKD 2.966 million to HKD 11.797 million, the smallest and cheapest one among is room H in 5th floor block 1B, which is in 197 sq ft and at HKD 2.966 million; Further more, one group customers want to buy room E and F totally 2 units in 6th floor block 1B by HKD 11.797 million. This project has 1,008 units, about 400 among are open style.
Insider pointed, Hong Kong Monetary Authority recently many times required banking tightening mortgage approval, leading many first housing people not eligible to mortgage requirement under stress test of rising interest by 3%, so some might be forced to default because they were not able to find bank credit, at the same time there was also possible that investor who use construction payment want to default because of personal economic conditions change. Potential buyers are better to find bank for borrowing capacity evaluation before housing, since default has risk to undertake demanding resale price difference by developer.
New projects in Hong Kong Island and Kowloon frequently appear defaults.
Some buyers faced financial problem under stock market crash recently, leading part of first hand properties which sold in the beginning of the year were returned. First hand property transaction data shows, since the stock market crash in the beginning of July, many new projects appeared defaults, for example, Henderson's Parker in Shau Kei Wan has 5 defaults, Cheung Sha Wan High One has 2, Diamond Hill Aspen Crest has 4, Tung Chung Century Link II has 3, Tsim Sha Tsui PASEO has 2, and even Cheung Kong's The Beaumount II in Tsueng Kwan which was sold in May this year registered 5 defaults.
Cheung Kong Investment Director Kwok Chi Wai believed the defaults frequently appeared recently will not become a trend. He mentioned The Beaumount II from their group has 5 defaults, which caused by customer personal financial problem. While they can put on sale these units again after mark up of 1% to 3%, so it benefits the developer.
First hand property default recently is individual case, and it is believed most are personal decisions, while the most important is the returned units still can be put on sale again, besides the sale will be good if developer provides market pricing, Kerry Executive Director Chu Ip Pui believed.
Default is individual case, and it is believed residence demand is still larger than supply, so the group will not change their new project pricing and sale policy, Far East Consortium senior sales and marketing director Fang Chun believed.
Market volatility and unclear external economy factors did not make banking tightening property mortgage, so it is believed Hong Kong banking will only just follow slowly even US rising interest rate, Ricacorp Properties mortgage managing director Huang Wing Yan expressed.
