The overall property prices in Hong Kong have been declining in the past two years, but the price per square foot of new properties has become "more and more expensive as they sell." The situation is not just that individual transactions have risen against the trend, but will rise throughout the year in 2023. From February every The level of 23,000 yuan per square foot has risen to 33,000 yuan in December, setting new highs against the market many times. What is even more surprising is that the location of this property is not in a traditional expensive area, but on Tokyo Street in Cheung Sha Wan. The price per square foot of 33,000 yuan is significantly higher than that in Qi. Who would be willing to take delivery of new buildings in Tak, Hung Hom or even urban areas at prices that deviate significantly from the market price? Later, the media revealed that a large commission was suspected to be involved, which could be as high as 40% to 50% of the property price! Of course, this situation is unusual. If the rebate is too high, will it affect the bank's ability to underwrite mortgages?
Generally speaking, banks will conduct an appraisal of the unit before granting a mortgage. Buying a new building, especially the price of a new building, is more expensive and complicated than that of a second-hand building. For second-hand properties, the seller simply sets the price, the buyer and seller negotiate and finalize the transaction price, and then the bank conducts a valuation for the relevant unit.
Data picture (picture source: Jingyi Editorial Department)
Enjoy up to 30% discount
The valuation and transaction price may not be similar, but if the difference is not large and the buyer has sufficient financial ability, the mortgage loan approved by the bank will be enough for the buyer to "safely" go through the transaction. As for first-hand properties, they are generally divided into "face price", "barrel price" and "contract price". The so-called nominal price refers to the unit price listed by the developer on the price list. According to new building sales regulations, developers are required to clearly list the selling price of each unit on the price list, and the relevant selling price is deducted from any offers or discounts provided by the developer. For example, the newly launched new project Hui Ming in Wong Tai Sin has a first batch of 50 units, priced between NT$4.84 million and NT$8.24 million. This price is the nominal price. As for the "bare pig price", it means the discounted price after deducting all discounts from the developer. Nowadays, developers mostly offer various discounts and rebates for new buildings to attract customers. You can enjoy a discount of up to 30% on the property price. The price after deducting all discounts is the "bare price".
However, since the benefits available to each buyer are not the same, such as basic payment method, payment method, professional qualification, etc., not every buyer may be able to enjoy the "full set" of property price discounts. Therefore, buyers have to conclude The discounted price may be higher than the "bare pig price". The "contract price" is the price between the buyer and seller in the provisional sales contract. When banks approve mortgages, they generally use the "bread price" as the basis, while mortgage insurance companies use the "contract price" as the basis for calculation. There may be differences in the combined figures between the two, which will have a slight impact on the mortgage.
Commission rebate takes several months
Buying a new property generally provides a "normal" range of rebates, which theoretically has no impact on applying for a bank mortgage. Most of these rebates can only be obtained after the developer releases the commission to the agent after the transaction is completed, which takes several months to half a year.
As for the amount of commission rebates, there is no upper limit specified in the law. For buyers, what they have to worry about may be whether they can successfully receive the commission. It was reported a few days ago that a buyer suspected of buying a new building and signed a "commission slip" with a broker, but still was unable to successfully obtain the commission. During the dispute between the two parties, the broker also had many "strange" reasons to avoid the issue of commission. Therefore, when buying a new property, buyers should remember to pay careful attention to the issue of rebate.