More homebuyers in Hong Kong surrendered their deposits on new flat purchases last year, and property agents expect such defaults to continue at a high level amid elevated interest rates and uncertainty about the direction of the city’s property market.
A report from property agency Centaline showed that 449 buyers of first-hand property forfeited their deposits last year, a 75 per cent increase from a year earlier. The final quarter saw 104 such cases, just short of triple the 40 cases in the third quarter. The agency did not report the value of the forfeited deposits, but the typical initial deposit is HK$100,000 (US$12,844), according to market sources.
The number of default cases will stay high in the short-term, agents said.
“As the market will be busy after Lunar New Year, and developers will be offering discounts, we expect the number of defaults on new property units to remain high,” said Yeung Ming-yee, a senior associate director at Centaline. “There will be around 100 such cases in the first quarter of 2025.”
The number may decline over the longer term after the government reduced mortgage requirements for buyers of unfinished flats late last year, agents said.
Forfeits indicate either that buyers are not able to move forward with their purchases, or that they expect to find significantly better deals.