Barely a month after the launch, however, the developer is selling apartments at The Wings at prices that are as much as 30% lower. To be fair, this is not strictly an applesto- apples comparison, as the earlier units had sea views and more bedrooms. Still, it is just one of many signs that Hong Kong’s residential property market could be starting to lose altitude.

 

Home prices in the territory have been on a tear since early 2009. By June this year, they had run up to a new high, surpassing the last property cycle peak in 1997. In the last few months, however, transaction volumes have started to shrink. By the last weekend of November, home sales in Hong Kong had fallen to a six-year low. Now, prices are starting to ease too, falling a modest 2.5% since early June.

 

Why is Hong Kong’s property market coming unstuck? Late last year, the government began pouring cool water on the speculative fever that was building up. It slapped on a special stamp duty of 15% on properties sold within six months of purchase. The Hong Kong Monetary Authority also raised the cash down payment required for luxury homes costing HK$12 million or more. On the supply front, the government has aggressively stepped up the release of land parcels. It has also pledged to build more than 17,000 subsidised homes for low-income earners.

 

More recently, sentiment has taken a beating from stock-market volatility and nervousness about the growth outlook for next year, after Hong Kong narrowly escaped a technical recession in 3Q. Added to this, borrowing costs have been moving up. Since the beginning of this year, mortgage rates have climbed to an average of 2.75% from less than 1%.