Many Developers Advertising Heavy Discounts

A report from the South China Morning Post. “The signs of a property market slow down are here. Shu Qi, one of the highest paid actresses in China, got off lightly with a marginal loss on her Tai Po property sale on Sunday, according to market observers as they expect home prices to fall over the next 12 months amid concerns of a deteriorating trade war and rising interest rates.”

“The Taiwanese-Hong Kong actress and model sold a 1,606 square feet villa at The Beverly Hills development for HK$17.6 million (US$2.2 million), down HK$2.4 million from her initial asking price of HK$20 million two years ago. She incurred a loss of at least HK$700,000 compared to her purchase price of HK$18.3 million in 2011, excluding commission and taxes.”

“‘Chartered surveyors in Hong Kong indicated a fairly dramatic shift in sentiment surrounding the housing market in Hong Kong in August,’ said Sean Ellison, senior economist for Asia-Pacific at the institute.”

“Lung Siu-fung, analyst at China Merchants Securities International, said the timing of Shu’s sale was good despite the loss. ‘She would have needed to cut the price by an even greater extent if she had decided to sell later,’ Lung said. ‘If the sentiment [in home market] continues to sour, the luxury home market will be hit the most and it would be even more difficult to find buyers.'”

“It is not unheard of for a property to be sold at a loss at the same Tai Po development. Another villa of the same size sold for HK$16.56 million, or a loss of 11 per cent, in mid-July.”

The Bangkok Post in Thailand. “SET-listed residential developer L.P.N. Development Plc will shift to development of single houses, townhouses and duplexes next year, doubling launches in this segment after seeing a slowdown in the condo market. Chief executive Opas Sripayak said from 2019, the condo market will fall behind previous years’ growth as negative factors such as stricter mortgage regulations and higher interest rates will dampen consumer sentiment.”

“‘The third quarter this year is the worst period, as condo presales and transfers will be the lowest,’ he said. ‘We see many developers advertising for ready-to-transfer units with heavy discounts.'”

“Mr Opas estimated a drop of 10-20% in total condo presales and transfers in the overall market in the third quarter from the same period last year. The key cause was financial institutions tightening mortgage lending rules. Condo demand remained strong but buyers were unable to get housing loans as their monthly income was lower than the bank’s requirement or credit line.”

From Free Malaysia Today. “Imagine this scenario – you want to sell your home and engage a real estate negotiator (REN). He advises you about the current market price based on some recent transactions. He gives you the link to a website where you can check recent transactions.”

“After your ‘house for sale’ advertisement is up for a few days, your REN informs you that a potential buyer called, and wanted the selling price to be reduced by 30%.”

“Maybe this: ‘Are you crazy?’ In fact, this would be the reaction even if you were asked to knock down the price by just 10%. Well, this is a ‘buyers’ market’ as they say. Well, not everyone agrees with this, especially for properties in high-demand areas such as in Kuala Lumpur and Penang.”

“However, this is not confined to just these two states. This same thing happened to famous billionaire investor Warren Buffet for his property in Laguna Beach, US. An article in the media said he had to chop the price of his Laguna Beach home to US$7.9 million. Last year, he wanted to sell his ocean-view house for US$11 million (RM45 million).”

“That’s a 28% drop from the original asking price. The property is a 3,588 square-foot, six-bedroom home. He has owned the property since 1971 when he paid US$150,000 for it.”

“Coming back to the decision of selling the home you own. Remember, if your property was advertised last year and has not been sold until this year, anyone searching for the same property may see the price. It’s not such a good idea because now the buyer will be even more motivated to negotiate for a lower price.”