The new private homes in the city might be out of supply in the near future, and some local homebuyers might start to look across the border
As the private housing supply in the city is expected to continue shrinking in the next few years, the development of the Guangdong-Hong Kong-Macau Greater Bay Area, particularly nearby Hengqin, might attract lower-income residents to purchase homes and reside across the border, the local real estate industry says.
Figures from the Statistics and Census Service show the number of residential units completed in the first 11 months of 2019 amounted to 2,617, down by over 37 percent and 39 percent respectively from more than 4,000 homes completed in 2018 and 2017. The result so far in 2019 was also lower than the annual average of 2,774 homes completed in the 2009-2018 period.
Another set of data from the Land, Public Works, and Transport Bureau (DSSOPT) also detailed the overall picture of the bleak home supply in the territory. The number of residential units under application for construction amounted to 8,588 in the third quarter of last year, plunging by 58.4 percent from 20,624 in the last quarter of 2018. This latest figure was also the lowest level, at least since 2010, when over 31,360 homes were under application for construction.
The number of homes under construction also only totaled 5,894 in the July-September period of 2019, the latest DSSOPT data show, which is the lowest tally since 2010.
Jeff Wong, Senior Director of Capital Markets at Jones Lang LaSalle Macau (JLL Macau), remarked the industry has flagged about the problem of the shortage of home supply, especially the first-hand private homes, for years. “The shortage might not be that severe in the next one to two years, but it’s likely that there might be no brand new residential projects to be launched in the market after three to four years,” he highlighted.
“Looking ahead, new private residential projects offering hundreds of homes each will become rare in the city, and even if there are new projects, they might only cater 20-30 each,” he added.
There were only eight new projects acquiring the pre-sales permits last year, significantly lower than 28 projects and 21 projects recorded respectively in 2018 and 2017, the latest official data said. It was also a record low since the property pre-sales law came into force in June 2013, mandating the pre-sales of any types of property projects must attain a government permit first. In addition, the eight new projects approved for pre-sales last year only cater to about 60 homes in total.
“Though the residential supply from the private sector is expected to be extremely limited in the future, the easing of home purchase policy in Zhuhai, Macau’s affordable housing units re-opening for applications, and the proposed neighbourhood residential project in Hengqin will provide a range of homebuying options for Macau people,” Mr. Wong added.
The neighbourhood residential project refers to 3,800 flats in an area of 180,000 square metres in Hengqin reserved exclusively for the purchase of Macau residents at affordable pricing. The Hengqin authorities also noted, when announcing the news in late December, that they were working hand-in-hand with the Macau administration to push forward the project, whose details, such as the exact location and time for completion, still await decisions. The officials only emphasised at the time the buyers of the project had to be Macau residents in terms of both first-hand and second-hand sales.
According to the Hengqin administration, Macau residents have bought over 6,000 property units — including homes, offices, shops, and other types — in Hengqin as of end-2019, accounting for about one third of the total property sales on the island.
Though the number of Macau residents living there still represent a minimal proportion — only 406 residents by the end of last year — the number could be on a hike with the ongoing development of the Guangdong-Hong Kong-Macau Greater Bay Area, which brings the two special administrative regions and the mainland Chinese province closer together.
The nation’s top-leading group for the development of the Greater Bay Area, whose leader is Chinese vice-premier Han Zheng, has recently announced that Hong Kong and Macau residents would be regarded as local residents when they purchase properties in the nine Guangdong cities. This means the buyers from the two special administrative regions no longer have to provide proof of their duration of residence, study, or employment, or pay a certain amount of individual income tax and social insurance before purchasing properties in the nearby province.
Rainbow Lei Choi Hong, managing director of Sun City Property Co Ltd, pinpointed: “With the gradual development of the Greater Bay Area, namely the Hengqin neighbourhood residential project and fewer restrictions for Macau homebuyers during purchases in the mainland, it is expected some low-to-mid income individuals here might be interested in buying homes in the nearby [Guangdong] cities for end use and even investment.”
“This would translate to the downward pressure for the local home market,” she remarked, adding the number of home transactions this year might shrink by at least 10 percent.
Figures from the Financial Services Bureau show the number of houses sold dropped by 26.8 percent year-on-year to 7,745 units last year, the lowest level in four years. The 2019 home prices averaged MOP109,068 per square metre, inking down 1.9 percent from the previous year.
While Mr. Wong from Jones Lang LaSalle highlighted the lack of local home supply might further dampen the home sale volume here this year, coupled with the uncertainties clouding the local and global economies, he noted the scarcity of local supply served as the support for the home market, given the robust home demand. His property agency predicts the local home prices would remain stable this year with a potential 5 percent decline in the high-end residential segment.
But he cautioned, “The development of the Hengqin neighbourhood residential project, the [further] easing restrictions in home purchase [in Guangdong], and other factors might affect the home demand here.”
Dongguan as fastest rising home market in GBA
The overall home market in the Guangdong-Hong Kong-Macau Greater Bay Area enjoyed a 5.6-percent hike in 2019 with seven cities in the region recording gains, according to Centaline Property Agency Ltd, one of the largest real estate brokers in Hong Kong.
The Centaline Greater Bay Area Index, which measures residential prices in nine Guangdong cities and two special administrative regions, climbed 5.6 percent year-on-year to 114.44 points by December 2019.
Among the 11 cities in the region, the residential price index in Dongguan surged 22 percent from the previous year to 130.5 by end-2019, while the home price index in Zhuhai also rose 16.8 percent year-on-year to 113.75.
The home markets in Foshan and Shenzhen also enjoyed robust performance in 2019, with the housing index increasing 10.5 percent and 9.3 percent respectively. For Huizhou, Hong Kong, and Guangdong, the home index jumped 7.4 percent, 4.4 percent, and 2.6 percent respectively last year.
Only four cities in the Greater Bay Area suffered declines in home prices in 2019, with the biggest drop of 5.5 percent in Zhongshan followed by a 3.9-percent plunge in Zhaoqing, the Centaline Greater Bay Area Index shows.
For Macau, the Centaline home index went down 3.2 percent last year while the residential index in Jiangmen decreased 2 percent.