Home prices to hold firm despite policy

Thursday, July 21, 2011
Issue 1363, Page 3
Word count: 625
Published in: Macau Daily Times

By Poyi (Natalie) Leung

The government’s introduction of a string of anti-speculation measures have successfully slowed down the residential transaction volume in recent months and the effects are expected to continue for the rest of the year, but little impact seems to have been imposed on the prices, especially those of high-end apartments according to Jones Lang LaSalle’s Macau mid-year property review.

From January to May this year, a total of 10,441 sale and purchase agreements in the residential market were recorded which, head of residential in Macau Jeff Wong said, reached the peak during the period.

Of these transactions, 14 percent were brand new apartments and 86 percent were second-hand.

The majority of the buyers were local investors and end-users, while transactions by overseas funds were also registered, the real estate services firm disclosed at a press conference in Macau yesterday.

However, Wong predicted that transaction volume is believed to have dropped in June and further in July, as a result of the SAR Government’s imposition of a number of initiatives to curb speculation particularly the special stamp duty, tightening of maximum loan-to-value ratio for equitable mortgage loans and also the removal of the 0.5 percent intermediate transfer duty.

“The number of transactions is expected to only restore growth at the end of the third quarter or in the fourth quarter of this year to around 800 to 1,000 per month,” Wong said.

Nevertheless, the head of residential pointed out that home prices have remained steady in the past couple of months, believing that the situation is unlikely to change before the end of this year.

For the first half of 2011, high-end residential capital values increased by 15.2 percent as a whole when compared to the end of 2010. The mass and medium residential market also reported a 10.6 percent growth in capital values.

“Despite the imposition of the special stamp duty, residential properties have been and will continue to be one of the most preferred investment vehicles among Macau people, while owner-occupiers and long-term investors will continue to be the major source of demand,” Wong said.

For example, all of the 126 units of Soho Residence, a standalone residential tower in Patane, were sold out in less than a month. Some of them were even sold at about HKD 5,200 per square foot, a record unit price within the district, Jones Lang LaSalle said.

In addition, Wong said limited supply in the upcoming months will allow home prices to continue to hold firm in the second half of the year.

A total of 2,486 units are scheduled for completion in 2011, while 2,300 of them were already sold through pre-sale. For the new supply of 1,374 and 1,486 units respectively in 2012 and 2013, “almost all of those scheduled for 2012 and more than half of those scheduled for 2013 have been sold”, according to the Macau mid-year property review.

Although the mortgage interest rate has also been raised, Wong said it is still “relatively low” and therefore holding power has remained strong.

Yet, he pointed out the low-end property market is likely to be hit the hardest because of the tightening of home mortgage loans and the increased supply of public housing.

With regard to the leasing sector, which Wong said is primarily driven by the demand from imported labour, the average rental value of the luxury and mass and medium markets jumped respectively 11.9 percent and 12.2 percent in the first six months of this year, when compared to end 2010.

He added that thanks to the construction of the light rapid transit, several more large-scale projects on the Cotai Strip and the Hong Kong-Zhuhai-Macau Bridge, it is believed that the city’s residential rents have the potential to grow further in the near future.

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