The Macau government introduced another measure on the local property market in June. The new pre-sale law aims at bolstering the protection of homebuyers. Developers are now required to complete the foundation of a building before obtaining the pre-sale approval to sell or market the units, and this has resulted in a significant reduction in the number of new flats in recent months. According to the official figures from the statistical department, only 18% of residential transactions in June and July 2013 involved new units, compared with 54% recorded in the first five months of the year.
The Macau government introduced another measure on the local property market in June. The new pre-sale law aims at bolstering the protection of homebuyers. Developers are now required to complete the foundation of a building before obtaining the pre-sale approval to sell or market the units, and this has resulted in a significant reduction in the number of new flats in recent months. According to the official figures from the statistical department, only 18% of residential transactions in June and July 2013 involved new units, compared with 54% recorded in the first five months of the year.
However, this has not shaken Macau’s strong residential market, as it started to bounce back in August after a stall in June and July. Average home prices on the Macau Peninsula and Taipa increased by 19.7% and 16.4% over the second quarter of 2013 respectively, while the average price in Coloane, which is dominated by primary luxury flats, declined by a mere 1.2% quarter-on-quarter.
Franco Liu, Managing Director of Macau and Zhuhai and Head of Investment and Sales, Southern China, Savills said, “Property owners, homebuyers, developers and estate agents have adapted to the new regulations. The rebound is seen as pent-up demand being released after buyers and sellers have taken a wait-and-see attitude towards the new law in the last three months. The market is once again heating up.” He added that despite the extra difficulties caused by the pre-sale law, developers will continue to launch new projects over the remainder of the year, with unit sizes ranging from 1,640 sq ft to 7,760 sq ft, in order to fill demand for mid- to high-end residential properties.
Savills estimates that an average of 1,658 residential units will be completed from 2013 to 2015, 16% below the ten-year average of 1,975 units from 2003 to 2012, indicating a reduced level in the supply of flats in the short to medium term.
“Market activity will gradually regain momentum, with gaming as the key revenue driver. The completion of the Hong Kong–Zhuhai–Macau Bridge in 2015, as well as phase 1 of the Macau Light Rail Transit (LRT), will also add to the growth. With the population estimated to increase from 590,000 to over 610,000 by 2016, we believe robust housing demand from local upgraders will lead to higher transaction volumes up to the end of this year,” said Franco.