The Primary Market Has Become a Paradise for Speculators

Primary market transactions have been vibrant recently.  Non-Hong Kong residents accounted for 30%-40% of transactions, with the share reaching as high as 50% in some new launches. However, owner-occupancy rate in new developments was only 43.4% and the leasing rate was 56.67% respectively, showing that most of the buyers were investors. 

With investors flooding the primary market, developers have been raising prices and releasing more units for public sale. Buyers who entered the market at low prices last year are now seeing a 10%-20% profit, and many investors are taking advantage of the market boom to cash out. Clearly, the primary market has become a speculator's paradise. The rise in new home prices was driving up the prices of secondary properties nearby. marking genuine homebuyers to pay higher prices. Hong Kong government lifted the cooling measures of property market has help the developers to digest the inventories, but homebuyers are suffering growing prices. 

Data showed that in April, mainland buyers owned 1,892 transactions in Hong Kong's primary and secondary residential markets, reaching a two-year high, the month-on-month surging 47.7%. The proportion of investors entering the market rose from 20%-30% to 50%, with some new developments even being snapped up by block buyers.  

As property prices rose in recent months, coupled with purchases made at low prices last year, some new developments’ investors are actively chasing out to lock in profits of 10% to 20%.    

The buoyant primary market has led to developers raising prices and releasing more units for sale. The overall market is experiencing the rise of first-hand property prices driving up the prices of second-hand market, causing the genuine self-use homebuyers to pay higher prices to enter the market.  

The government's removal of cooling measures has helped developers accelerate inventories clearance, but it has also attracted as influx of speculators, pushing up property prices and making it more difficult for self-use homebuyers to enter the market. This contradicts the government's goal of helping more low-income homebuyers to own their properties. Therefore, it is necessary to reinstate the regulatory measures to prevent speculators (especially non-local speculators) from entering the market.