Heading South

May 7, 2006

After a flurry of buying spree in February and March, the sales market has quieted down in recent weeks due to a revived fear of interest rate hike. Some developers are beginning to slash price of their remaining stock. Some are teaming up with financial institutions to offer more mortgage incentives.

We remain confident that this is just a recess, as there is already a pent up demand in the sales market gathering momentum. Many buyers are now staying on the sidelines but with cheque book in hand, ready to plunge in. In the luxury market, the majority of the buyers are up-graders. There is a growing trend that people in Midlevels are looking for Southside properties – for fresh air, sea view and a more relaxed ambience. Air pollution has taken its toll, so has high density of development on the north side of the Island. Southside is home to most international schools, which are in high demand not only from expatriates but also local families who shun local education. There are about 10,000 luxury domestic units in Southside, but there are more than 20,000 large units in Midlevels Central. Midlevels West, Midlevels East, North Point and Happy Valley. However, due to its geographical limitation and unavailability of sizeable developable land, Southside doesn’t have much to offer except raising its price threshold. Obviously, if the migrating trend persists, Southside property price will experience more upward pressure. We are certain this will happen this year and next year.

So it appears that buying south is a sensible move. For people who don’t have immediate need to move south, perhaps it’s better to invest in Southside properties to hedge against future price rise. We won’t be surprised to see prices in some locales of Southside overtaking their counterparts at The Peak in the near future.

By Claudia Hui