HONG KONG • To see the unintended consequences of the Hong Kong government's efforts to tame property prices, take a look at the latest batch of newly built apartments to go on sale.
At least 800 bids for 105 units flooded developers of a remote housing complex, and nearly all of them were sold out in a single day last week.
Such sell-out crowds are becoming the norm at new projects this year as distortions caused by government attempts to cool property prices have nearly halted the supply of older, existing homes for sale. This is driving demand for new ones offered by developers.
High stamp duties targeted at all but first-time local buyers - the centrepiece of a government push to finally cool the world's most unaffordable housing market - have prompted both would-be sellers and buyers of existing homes to hit the brakes.
Instead, buyers have piled into new homes, or the primary market, where developers entice buyers with tax rebates and even loans.
The upshot: Since Hong Kong Chief Executive Leung Chun Ying announced the latest round of property tightening in early November, prices have kept climbing and demand for new homes has kept soaring.
"With the stamp duties and mortgage curbs, nobody can get financing in the secondary market, and nobody needs to sell," said Mr Justin Chiu, executive director of Cheung Kong Property Holdings.
"That is creating demand for primary homes, and developers can adjust prices when they see that demand is as strong as it has been recently."
A gauge of Hong Kong developer stocks has soared 12 per cent this year, outpacing the 6.8 per cent advance of the broader Hang Seng Index.
Demand for new homes soared by 48 per cent last month over December, compared with a 76 per cent decline in the same period last year, according to data from the government and residential property agency Midland Realty.
A batch of 188 units at China Overseas Land & Investment's new complex at Hong Kong's old airport site, One Kai Tak - priced as much as 41 per cent higher than for a first lot five months ago - sold out in one day in mid-January.
Even in the lacklustre secondary market, home prices are up by 1.7 per cent since November, according to a Centaline Property Agency gauge that is the only price index tracking residential properties.
Developers have been gradually increasing their share of property sales in recent years. The proportion of total new home sales has climbed from 10 per cent in 2010, before the government first began demand-curbing policies in 2012, to more than 30 per cent last year, government statistics show.
That trend may accelerate as the latest measures add more costs for individuals to sell their properties and buy new ones, analysts say.
"Volume has dried up" in the secondary market, said Mr Buggle Lau, chief analyst at Midland Holdings. "Home owners think twice before selling because if they want to buy again, they face heavy stamp duties and mortgage caps."