Hong Kong's 'haunted homes' sell for steep discounts during downturn, giving first-time buyers a way in

Homes that were the site of untimely or violent death more often than not come with huge discounts for those brave enough to take the plunge.
PHOTO: South China Morning Post

Even in a slump, Hong Kong’s famously lofty property prices can be enough to send a shudder down the spine. But if that doesn’t do it, how about the thought of sharing a flat with a ghost?

Homes touched by untimely or violent death more often than not come with huge discounts for those brave enough to take the plunge, say agents. And during times of market uncertainty – such as now – the bargains can become even more pronounced, giving first-time buyers and investors an entry point.

“When the market softens, [these flats] will be less popular because owners of normal flats are willing to cut their prices. As the market booms, when prices are high, these flats with lower prices have a higher chance of selling,” said Jessica Chow, assistant district sales director at Century 21 Goodwin, an agency.

Properties stigmatised by murder or suicide can be around 30 per cent cheaper than “normal” homes, according to Joe Lee, deputy district sales manager at Centaline Property Agency. Even flats on the same floor often come at a sharp discount.

For instance, a flat measuring 612 square feet in Elizabeth House in Causeway Bay changed hands last May for HK$8.9 million (S$1.5 million), 22.6 per cent below market price, Lee said. The reason? It was on the same floor as an unsolved murder case dating back to 1984.

A flat in Elizabeth House in Causeway Bay changed hands last May for $1.5 million, 22.6 per cent below market price. 
PHOTO: South China Morning Post

And at City One in Sha Tin, a flat measuring 451 sq ft that has another one said to be haunted on the same level, recently went for HK$6.38 million, 20 per cent, or HK$1.59 million lower than the bank valuation of a similar unit downstairs.

City One has a particularly high prevalence of homes tainted by unnatural death, simply because of the sheer number of units there, according to Chow. This affects rents as well as prices.

“Many could be leased at lower than market levels,” she said.

A flat measuring some 300 sq ft that normally leases at HK$13,000 a month could be rented out for as little as HK$9,000 if there was a sudden death, a discount of some 30 per cent, Chow said.

If the flat was normally worth HK$5 million, it may change hands at more like HK$3 million. With the HK$9,000 of rent, the yield could be 2 to 3 per cent.

Not only is the possibility of sharing a home with the spirits of the departed an unpalatable thought for many, it is also bad for feng shui, the ancient Chinese belief that the external environment affects the fortunes of people inside.

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Valuation agencies jot down the addresses of homes touched by tragedy in their database. For cases that involve particularly grisly details – such as a dead body being dismembered – they may choose not to even undertake the valuation, and the mortgage request may not be approved.

Some banks might still give the mortgage the nod, provided the income and liquid capital of the buyer is good, but it will often carry a loan-to-value ratio about 10 per cent lower than usual, depending on the case’s seriousness.

The mortgage rate, too, is likely to be higher by at least 0.1 per cent.

Banks are more conservative with such properties because “haunted flats may be difficult to resell as the Chinese tend to avoid them,” said Eric Tso, chief vice-president at mReferral Mortgage Brokerage Services.

“The range of customers is narrower and the resale value is lower. There will be a larger discount [in valuation] if they have concerns.”

Potential buyers should beware if a flat’s valuation is “unavailable or particularly low” compared to similar units in the building, Tso added. They can get the relevant information by searching online, asking agents, or quizzing the flat’s neighbours or the building’s security guard.

This article was first published in South China Morning Post.