Henderson aiming for HK$10b sales
Updated: 2010-02-11 07:37
By George Ng(HK Edition)
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Affordability of mortgage loans seen as continuing stimulus
HONG KONG: Henderson Land Development Co Ltd said it hopes to generate HK$10 billion from selling about 700 residential units this year, matching sales of last year, as the developer remains bullish about the prospects for the housing market.
"Several positive factors bode well for the property market this year," Thomas Lam, general manager of the developer's sales department, said at a press conference yesterday.
These include low interest rates, mortgage loans' high affordability, the strong demand for properties and the relatively low supply, he explained.
The Hong Kong Monetary Authority, the city's de facto central bank, has kept its base rate at a record-low 0.5 percent since late 2008 in order to shore up the local economy.
The low-interest-rate environment, coupled with ample liquidity after governments around the world flooded the market with cash, has enabled banks to offer mortgage loans to home buyers at aggressive rates - as low as 2 percent per annum. As a result, mortgage loan affordability for home buyers' has risen to historically high levels.
Mortgagers currently need to set aside only about 34 percent of their monthly income for mortgage installments, Patrick Chow, research head at Ricacorp Properties Ltd, told China Daily. A proportion lower than 50 percent is normally considered healthy.
Aside from high affordability, risk aversion following the financial tsunami has also driven some investors into the real estate market from the equity market, further boosting demand for properties, Henderson Land's Lam said.
Meanwhile, the influx of mainland buyers provides further support for the housing market, the executive said.
According to estimates by industry sources, mainland residents bought about 10 percent of homes sold in the city last year, Hong Kong Monetary Authority Chief Norman Chan said last week.
In contrast to the strong demand, the housing supply has been relatively low in recent years.
Latest figures from the Transport and Housing Bureau showed the private housing supply in the primary market totaled 48,000 units as of the end of 2008, lower than the normal level of about 50,000-60,000.
Henderson Land plans to launch four projects for sale in the first half this year to take full advantage of the current market boom, providing a total of 400 housing units to the market, Lam revealed.
He foresees a further 15-20 percent increase in property prices this year after a strong surge last year.
An approximately 30 percent rise in property prices over the past year has triggered worries about a bubble in the real estate market.
However, Lam says he sees no bubbles right now in the market, citing the high affordability of mortgage loans.
(HK Edition 02/11/2010 page2)