About the HK property market

There are 3 recent facts as follow.

1.      The relaxation of DSD for longer waving period

2.      New (pre-sale) property is observed to be cheaper than the comparable second hand property (the inefficiency is probably caused by dampened volume due to stamp duty, relatively strong holding power of the 2^nd hand property owner, etc)

3.      More pressure to import labor in the construction field

Here is what I suspect underneath those facts

The relaxation of DSD will induce people to buy “pre-sale unit” and the developers will be very keen to make “pre-sale” to lock-in the high price. The abnormal premium of second hand over first hand will diminish quickly as the new comparable property is definitely a superior substitute to the second hand unit. The diminishing of this abnormal premium will urge the selling of the second hand property owner if they have purchased an (expensive) pre-sale unit.

And then the developer will even more aggressively lobby the government to import cheap labour and their margin will be further enhanced. After all, the pre-sale price is fixed…

It is expected the core earning of those major local developers will be solid in the next few years.