China is celebrating. It’s showing off military hardware. Chinese markets are closed. Finally, folks around the world can focus for a few days on things other than China’s slowing economy and strong-arm methods to stops stocks from plunging further.

But there’s something happening in Hong Kong with a sense of foreboding for China and other places around the world: As stocks swooned, home sales in August plunged.

Hong Kong’s stocks got swept up by the China stock market bubble. In May 2014, the Hang Seng was at 22,000, made its way to 24,000 by March 2015, then soared 18% in six weeks, to 28,442 by April 28. Participants were getting richer by the minute. But then it dropped and now sits at 20,934, down 26% from its April peak, down 12% in August alone, and back where it had been for the first time in May 2007.

Mainland Chinese stocks fared worse, with the Shanghai Composite crashing 39%. Wealth has evaporated into the ether at a stunning speed, and all the fun has been leeched out of it. But it’s not just a game.

There are consequences. For example, the Mandatory Provident Fund that covers 2.5 million workers lost 5.6% in August alone, according to the South China Morning Post . And it also hit the housing market.

In August, home sales in Hong Kong plunged 27.8% from a year ago, to 3,896 units, according to the Land Registry. Total sales value dropped 30.3% to HK$31 billion ($4 billion).

But developers that cut prices and offered big incentives were able to unload their units.

Sun Hung Kai Properties, one of Hong Kong’s largest property groups, offered discounts of 11% for the apartments at phase two of its Century Link development in Tung Chung, according to the South China Morning Post . It also threw in a special incentive for investors: a cash rebate equivalent to 30 mortgage payments, but only on second mortgages, hence only for investors. To help investors overcome the banks’ mortgage ceiling of 60%, SHKP offered them an additional loan of 15% of the purchase price.

It was a sweet deal.

The pre-sale started at 9 a.m. on Thursday. Over 6,100 potential buyers had registered. By 6:20 p.m. the same day, it had sold all 328 units, “according to market sources.” Investors bought 40% of the units.

They weren’t exactly palaces, ranging in size from 378 to 645 sq. ft. But they weren’t cheap either, ranging in price, discounts included, from HK$3.82 million ($490,000) to HK$7.65 million (nearly $1 million).

Other sellers weren’t so lucky.

Far East Consortium International was able to offload only 58% of the 234 units at its Aspen Crest project in Diamond Hill when they went on sale last weekend.

“The investment sentiment wasn’t good in the past month,” Alvin Lam, a director at Midland Holdings, a real estate broker traded on the Hang Seng, told Bloomberg . “You can tell from the city’s falling retail rents, consumption, and retail sales.”

He’d helped the government organize an auction of 10 apartments. The auction took place on August 24, the day after Chinese stocks had their worst plunge since 2007, and only four apartments were sold.

“People have been much more cautious because the adjustment was huge this time,” he told Bloomberg. “This is a widespread change. The adjustment happened not only in Hong Kong or Greater China, but also in the US and other areas.”

But before Hong Kong? An 18-month plunge from hell. Read… Macau’s Economy Blows Up

Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.