The fall last month compared to a revised 0.4% gain in September, according to data from the Rating and Valuation Department. Prices have risen 0.4% so far this year.
Prices in one of the world’s most expensive property markets had been resilient despite the COVID-19 outbreak and political uncertainties, supported by strong demand and low interest rates.
Property agents expect new developments and relaxed social distancing measures in October to support sales and prices in the short term, although the outlook for 2021 is for further weakness.
Rating agency S&P said this week it expected Hong Kong home prices to fall a further 5% in 2021, due partly to rising unemployment.
Total transaction volume in the secondary market so far this year has surpassed the full-year volume in 2019, realtor Centaline said. It expects 2020 transaction value to exceed last year’s to become the third-highest on record.
Hong Kong leader Carrie Lam said on Wednesday the government had no plan to adjust stamp duty rates for residential properties, citing tight housing supply and prices “beyond the reach of the average households”.
TORONTO | OTTAWA: Eager to move his young family into a house with a backyard amid the pandemic, Dale-Paul Jordan listed his Toronto condo for sale last month and prepared to start bidding on detached homes.
But the condo didn’t sell or get a single viewing. And when another seller in the building slashed their asking price, Jordan and his wife pulled the unit off the market and decided to delay their dream until spring at least.
“One of the things we’re handcuffed to is selling our condo to help with the downpayment,” Jordan said.
The couple are among a growing cohort of would-be buyers in Canada keen to move up the property ladder, but are trapped by a flood of condos in the Toronto and Vancouver markets. The situation is only expected to worsen with a near-record number of new condos under construction.
The COVID-19 pandemic has sped up a flight to the suburbs, with big-city condo dwellers trading up to detached homes with backyards and home offices, mirroring trends seen in cities like New York and London.
Their spending power has also been bolstered by record-low interest rates.
But as more people find themselves in the Jordans’ position, there will be fewer buyers for detached homes, real estate experts said, and that could have a trickle-down effect on the red-hot detached home market.
The cracks appearing in the condo market may well become the fault-line in Canada’s housing market. The average home price in Canada has climbed 17% since October 2019.
“Many buyers of single-family homes are move-up buyers who are relying on the sale of their condo in order to climb the property ladder,” said Vancouver agent and analyst Steve Saretsky in a note.
The average sale price of a detached home in the Toronto area is nearly 15% higher than a year ago, while condos have gained less than 1%. The widening gap is putting pressure on condo sellers trying to upgrade.
Indeed some agents say they have had clients on the brink of reneging on detached home offers, because of worries they won’t be able to sell their condo.
“We came very close a few times but we got the deal done,” said Thomas Mirkovich, a Toronto-based broker. “I had to have a lot of ‘come to Jesus’ moment conversations.”
Add in other pressures – Canada’s still-high unemployment rate, a sharp drop in immigration, and the winding down of mortgage deferral programs and emergency pandemic benefits – and conditions could be ripe for a reckoning.
“Now people can’t sell their condos downtown. Nobody wants to buy a condo,” Hilliard MacBeth, a portfolio manager and author of ‘When the Bubble Bursts,’ said in an interview.
“The government support means the real start of the recession has just been delayed.”
What goes up
Detached home sales in Toronto’s suburbs surged from a year ago, while active listings are at their lowest since 2016. But in the city center, a cliff is looming, with listings doubling as sales slide, and 22,434 new units set for completion in the Toronto area in 2021.
The surge in condos for sale is partly driven by investors facing a dearth of renters amid lower immigration, job losses and the evaporation of short-term rental demand due to pandemic-linked travel restrictions.
Condos for rent in the Toronto area doubled in the third quarter from a year ago and rents have plunged.
Prices are still up on the year, but falling by the month.
Toronto real estate agent Scott Ingram said he recently helped a couple who had bought a house outside the city sell their downtown condo.
When they first started talking, comparable units were selling for around C$700,000. By the time they listed six weeks later, they had to settle for C$641,000.
Moody’s Analytics forecasts that Canadian home prices will drop 7% in 2021, with both detached and condos falling. It sees Toronto area prices slipping to early 2017 levels and not fully recovering until mid-2023.
Ingram expects condo prices to continue to tumble as inventory piles up, and sellers who hold off may regret doing so.
“Today’s cut rate may be tomorrow’s good price,” he said.
GHAZIABAD: After Covid lockdown woes, the cash-strapped Ghaziabad Development Authority (GDA) seems to be finally finding takers for its properties. Between July and October, GDA sold properties worth Rs 125 crore, officials said on Tuesday.
This comes as a major respite for the GDA as the auction process had to be stalled between April and June due to the Covid-19 lockdown. “GDA was facing funds crunch prior to the pandemic but the lockdown had made matters worse. Now things are looking better,” said a GDA official.
In fact, property sales have started picking up since September. “Our data shows that the development authority auctioned properties worth Rs 125 crore between July and October, which include 30 industrial plots, 30 commercial plots, 128 flats and 15 residential plots,” the official said.
Buoyed by the response, GDA has started holding auctions every Saturday, with a hope that it will be able to auction at least 50% of Rs 300 crore worth properties in the coming days. “Market is showing some signs of revival and we do not want to miss it. So, we have decided to hold auctions every Saturday, except on holidays,” said the official.
As a concession, GDA will allow buyers to deposit 10% of the property amount at the time of auction, 25% after necessary paperwork, and the remaining in instalments, officials said.
Past data suggests that the development authority generated anything between Rs 700cr and Rs 750cr annually from compounding fees, map sanction, dues and rents. But over the past four months, that source of income has dried up. As far as liabilities are concerned, GDA has taken a loan of Rs 800 crore from the NCR Planning Board for its elevated road project and about Rs 900 crore from Allahabad Bank for its Madhuban Bapudham housing scheme. Annually they repay somewhere around Rs 270 crore, which leaves very little with GDA to fund its ongoing projects. As a result, many big-ticket projects in the city have been kept on hold.
GURUGRAM: Residents of some housing societies in Gurugram are demanding the reduction of maintenance charges citing financial instability and loss of jobs due to the pandemic.
They have also alleged that maintenance agencies have reduced their manpower, affecting the quality of their work, and so the upkeep fees should be brought down.
Yashesh Yadav, a resident of Vatika India Next in Sector 83, said people are already facing a lot of problems due to Covid-19, with many having lost their jobs. “It’s been seven months since the pandemic hit us and every sector has been badly affected. It has become very difficult for us to meet our expenses and also pay a high amount as maintenance charges. We have requested the maintenance agency to waive off at least 30% of the charges till the situation improves,” Yadav said.
Residents also alleged that the maintenance agency has failed to provide basic facilities despite taking the full amount and also sought a financial audit of the agency’s accounts. Lokesh Yadav, general secretary of K-Block RWA, Vatika India Next, said: “During the lockdown period, the maintenance agency reduced manpower significantly. This badly affected common services in the society, including cleanliness, waste disposal and security. Even after Unlock, only 50% of the maintenance staff is working.”
“In our block, there are over 600 flat owners who are paying between Rs 2,000 and Rs 3,000 as monthly maintenance fees. We have been demanding a financial audit of maintenance agency’s accounts for the last three years, but they have failed to comply,” he added.
Meanwhile, the society’s maintenance agency, Enviro, said that they have adhered to all government norms to fight Covid and continue to safeguard the township against the infection without passing the additional cost incurred to the residents. “We performed quite well during and post the lockdown. We ensured that the security and maintenance staff were given onsite accommodation along with food and water to help prevent the spread of infection within the township. This helped in seamless operations during lockdown,” said AK Singh, CEO of Enviro.
“As a result, the expenditure increased substantially and we bore it without passing it onto the residents. These measures are still in effect and we shall continue to enforce them without looking at the cost incurred,” he added.
Residents of Indiabulls Centrum Park in Sector 103 also sought a reduction of the upkeep fee. “Since we are paying the full maintenance charges, we should get full services. But that is not the case here,” said Pradeep Rawat, president of Centrum Park RWA.
The society’s maintenance agency couldn’t be reached for a comment.