Hong Kong’s Property Market Shows Signs of Recovery
According to a recent press conference held by Midland Realty, Hong Kong has been recognized as the most expensive residential property market in the world for this year, as reported by Deutsche Bank. The company’s executives suggested that the positive sentiment in the market might be due to local banks’ potential reluctance to immediately raise interest rates in response to any hikes by the U.S. Federal Reserve.
Dave Ma Tai-yeung, the CEO of Midland (Residential), stated that with optimism returning, developers are likely to accelerate the launch of new housing projects, leading to further recovery in the residential market. He noted a rebound in first-hand property transactions, which rose to 1,100 units in August after dropping to just over 800 in June and July.
Ma anticipates that first-hand property transactions could increase by 50% in the last quarter of the year, reaching approximately 5,100 units. Meanwhile, transactions in the secondary market are expected to go up by around 10% to 12,700 units.
As rental prices for residential properties continue to reach new highs, Ma highlighted that this trend could create significant opportunities for property prices to adjust accordingly. Benny Sham, a research analyst at Midland Research Centre, pointed out that developers are likely to offer attractive pricing on new homes, which may entice buyers away from the secondary market. He mentioned that successful sales of new properties often stimulate activity in the second-hand market.
Eric Tso Tak-ming, chief vice president at mReferral Mortgage Brokerage Services, indicated that Hong Kong banks might not follow U.S. rate increases immediately. Instead, they could only make small adjustments to their prime lending rates. Under the Linked Exchange Rate System, Hong Kong’s monetary policy usually aligns with the Federal Reserve, but banks have the discretion to set their lending and savings rates.
As Hong Kong’s Chief Executive John Lee Ka-chiu prepares to deliver his latest policy address, there are indications that the government might consider lowering the stamp duty threshold for super-luxury homes. Despite an increase in stamp duty for such properties earlier this year, Sham noted that demand for these high-end homes remains strong. In fact, over 80 first-hand residential property sales exceeding HKD 100 million (approximately US$12.8 million) have been recorded this year, surpassing the total from the previous year in just eight months.
This data reflects a market ready to recover and adapt, even in the face of recent changes to property taxes.
