Nan Fung prices new flats below market rate as cooling measures threaten Hong Kong’s property rally

Nan Fung Development has become the second Hong Kong developer to sell new homes below market price as the property market in the world’s least affordable city starts to feel the effects of rising interest rates, cooling measures and a slowing Chinese economy.

Housing policies announced by the city’s Chief Executive Carrie Lam Cheng Yuet-ngor in late June, including a tax on new flats that remain vacant, had played a part in weakening developers’ aggression when pricing homes, according to analysts.

Nan Fung is offering the first batch of 487 flats at its LP6 project in Tseung Kwan O next month at HK$15,304 per square foot, 3 per cent lower than the average price at the nearby 1,600-unit Malibu project that started selling in March.

It is as much as 30 per cent below the price of some units at Malibu sold this month, according to Dataelement, which monitors sales of new flats in Hong Kong.

The warning bell signalling a possible end of Hong Kong’s 15-year home-price rally has begun to ring louder, with many experts predicting a drop in home prices and developers starting to cut their prices.

Last week, Sun Hung Kai Properties, Hong Kong’s biggest developer, said it had cut the prices of homes at its Cullinan West II development atop Nam Cheong MTR station in Kowloon by as much as 10 per cent, the second time in less than a month it has taken such action.