Hong Kong’s bellwether for extravagant living — housing prices Peak area — suffered a proper dinging after a residence in the tony Mount Nicholson development sold at a price whose discount alone would build a stately mansion almost anywhere else in the world.
The 7,978-square-foot “House No. 16” in the development sold on Monday for just HK$721.88 million, or about $92 million. That works out to HK$90,484 per square foot, or 7.4 percent less than the HK$97,695 per square foot paid for its nearly identical neighbor, the 7,984-square-foot “House No. 17,” which sold for HK$780 million in April.
The HK$58.12 million ($7.42 million) price difference represents almost the exact same amount American singer Britney Spears paid for a 13,265-square-foot Italianate Villa (with three-hole golf course, tennis court and swimming pool on 21 acres, or 8.5 hectares) in Thousand Oaks, California, in 2015.
Mount Nicholson’s House No. 16 in the Jardine’s Lookout area also has a private swimming pool, in addition to a 5,163-square-foot garden, although the nearest golf course, in Deep Water Bay, is about six kilometres away.
Price Drop in Line With HK Market
Although the HK$58.12 million price haircut may seem steep, it was in line with the average percentile drop Hong Kong housing prices have seen over the last six months.
The Hong Kong Rating and Valuation Department’s most recent statistics show that overall home prices have decreased about 7.2 percent since hitting a peak in July. Average home prices for Hong Kong Island’s largest homes, which the department puts at above 160 square metres, or 1,722 square feet, are down about 6 percent from July, according to the department’s price index. But those numbers barely make a dent in the estimated 430 percent increase in Hong Kong’s private home prices since 2003.
Mount Nicholson, which was co-developed by Wheelock & Co. together with Nanfung Development, has long showcased Hong Kong’s priciest homes, and is home to some of Asia’s most costly residences. Two adjacent apartments at 8 Mount Nicholson sold for HK$1.16 billion, or HK$132,000 per square foot, in November, making them Asia’s priciest until they were eclipsed by the HK$151,785 per square foot, or HK$1.4 billion, paid for another Mount Nicholson villa in March of this year.
A Bundle of Bad News For Sellers
Those earlier deals makes Monday’s sale seem like a relative bargain, with overall prices set to fall farther based on other statistics coming out of Hong Kong. Late last week, the Hong Kong Monetary Authority announced that residential mortgage applications had swooned in November, dropping 12.3 percent to just 9,431 during the month, and that mortgage loan approvals had also dipped.
HKMA said the results of its monthly residential mortgage survey showed that approved mortgage loans totaled HK$29.7 billion in November, a drop of 1.5 percent compared with October, with approved secondary market loans down a whopping 13.6 percent to HK$8.8 billion. Loans on primary market transactions showed a marked increase, at 8.9 percent, to HK$8.7 billion.
Given the overall downturn in the market combined with rising interest rates, the mortgage delinquency rate surprisingly remained unchanged during November at 0.02 percent.
And the Rating and Valuation Department put November’s property index fall of 3.5 percent — from 379.6 to 366.3 — as the largest single monthly drop since November 2008, when it decreased 8.22 percent. That followed October’s slide of 2.56 percent and 1.27 percent drop in September.
Although housing prices in Hong Kong are widely predicted to drop anywhere from 15 percent to 40 percent this year, prices are still up 2.2 percent since January, when the property index was 358.4.
At the 10 major housing estates monitored by property company Ricacorp, just one flat sale in the secondary market occurred over the past weekend — equivalent to a 67 percent drop over the previous weekend, and advertised prices at both new developments and in the secondary market have been plunging rapidly.