HONG KONG, May 26 (Reuters) - Thousands of people flocked to snap up flats in Hong Kong on Friday, lured by favourable financing terms offered by the city’s No. 2 developer even as authorities fret over sky-high prices that a series of cooling measures has failed to dampen.
Potential buyers, clutching documents and flanked by agents, queued early for a chance to buy one of the 496 apartments developed by Cheung Kong Property Holdings Ltd, which is controlled by Hong Kong’s richest man Li Ka-shing.
The mostly local crowd buzzed around and blocked most of the passageways spreading across two floors in a glitzy shopping mall, with one property agency fencing off the mall’s food court with its blue banners to make room for their clients.
Cheung Kong Property, which has a market value of $28 billion, enticed buyers with lending terms they found hard to resist just a week after the central bank introduced its eighth round of mortgage tightening rules for banks in a bid to cool record-high prices.
The development features flats in the mid-range Tsuen Wan district spanning about 400 to 1,100 square feet (37 to 102 square metres), on sale for US$960,000 to $3.6 million. Yet robust demand at the project launch underscores the challenge the government faces in taming prices in one of the world’s most expensive real estate markets.
Skyrocketing property prices have added to growing discontent in the city, with its population already under strain from high living costs and a widening wealth gap although few buyers expected them to ease any time soon.
“The government has no ability to cool the property market. The earlier you buy a flat, the better,” said Hong Kong resident Ho Sui-kit, a freelancer in his 40s who hoped to help his son pay the downpayment to buy a three-bedroom apartment.
Ho said he would choose a mortgage plan promoted by the developer, where its subsidiary finance company would lend up to 85 percent of the apartment’s value to the buyer but charge higher interest.
Plans like these, where developers partner with finance companies, mean buyers like Ho could evade restrictions by the central bank and pay a smaller down payment.
When buyers get loans from banks, which are regulated by the central bank, they can only borrow up to 60 percent of the home value or less, depending on the size of their loans and if they already have outstanding mortgages.
“The government’s measures do not have a big impact on us, because for the people buying, a flat is their biggest wish in life,” said executive director at Cheung Kong Property, Justin Chiu.
He added the developer would “actively consider” offering more aggressive mortgage packages if there is demand for them.
“Most buyers are end-users, so there isn’t a bubble. As long as Hong Kong’s economy is stable and buyers have stable jobs, they can pay their mortgages and own their own homes.” ($1 = 7.7937 Hong Kong dollars)
Reporting by Venus Wu and William Ho; Editing by Christopher Cushing