Hong Kong property sellers face losses in the millions amid coronavirus, economic instability

Some Hong Kongers are losing millions of dollars as they sell their homes and pack up their bags amid the coronavirus outbreak and a weakening economy, according to local reports.

The South China Morning Post reported on Wednesday that since the outbreak in January, analysts have seen homeowners dumping their properties, losing as much as $A2.26 million in a bid to get out of the local market – one of the world’s most expensive.

According to local property agents, one vendor sold their 148-square metre house in Sheung Shui, in the city’s north district, for $4.14 million — losing $2.26 million.

In February, another vendor sold their 282-square metre house in Regalia Bay on Hong Kong Island for $13.03 million — losing just shy of $1 million.

“The losses reflect the urgency or desperation among some of the city’s home owners, given the constant flow of bad news,” said Martin Wong, a sales manager at Midland Realty. “Some of the home owners feel that the prospects are not good, so they want to sell quickly, especially amid the current epidemic.”

As of Thursday, Hong Kong recorded 100 cases of the coronavirus, according to the World Health Organisation.

The economy has been faltering for some time after months of the US-China trade war and anti-government protests in 2019. The virus has since exacerbated the struggling retail and hotel sectors, which have seen a slump in tourist numbers, according to the South China Morning Post report.

The government unveiled a record $27 billion budget deficit “to help shore up the economy that contracted last year for the first time since the global financial crisis,” the Post reported.

But Juwai IQI executive chairman Georg Chmiel said while some vendors are selling at losses, many Hong Kongers are choosing to weather the storm.

“The main trend is that transaction volumes are down. Some sellers are willing to sell for less than the recent average price just to move on with their lives, but most are holding on and waiting for better conditions,” Mr Chmiel told Domain. 

“With the coronavirus outbreak coming on top of the recent unrest, some sellers are throwing in the towel. Rather than wait for the eventual market rebound, they are taking their losses now and moving on.” 

He acknowledged that vendors who are selling now are prepared to meet the market.

“If you are selling today, you are motivated and willing to take a haircut. If you’ve owned your home for more than a few years, you can afford to sell at a discount,” Mr Chmiel said. “Prices are up more than 40 per cent since 2016. In 2018 alone, prices climbed 13.3 per cent.

“Buyers who are in the market now are expecting a bargain. Almost everyone else is sitting it out.

“Even big developers are holding back from launching new units into the market, despite their desire to sell up before the vacancy tax starts making it expensive to hold unsold apartments.”

He said despite the downturn, the city remained one of the most expensive to buy property.

“Does that mean that Hong Kong is now a cheap and affordable city? Not at all. Prices have fallen, but not by enough to make it a home buyer’s paradise.”