Hong Kong Residential Property Prices Have Bottomed Out With Some Estates Recording V-Shaped Rebounds, Q1 Transaction Numbers Expected to Climb by 49% Q-O-Q
- Buyers’ confidence has improved with the full reopening of the Hong Kong-mainland China border, Q1 residential transaction numbers now expected to climb by 49% q-o-q to approximately 12,500 transactions
- Q1 2023 residential prices rebounded to end decline since 2H 2022, with increases most notable in starter home and mass market segments
- Market sentiment further supported by Ad Valorem Stamp Duty reduction, developers to expedite new project launches, 2023 residential transaction numbers expected to rise by 25%–35% y-o-y and prices by 5%–10% y-o-y
Cushman & Wakefield announced its Q1 2023 Hong Kong Residential Market Review and Outlook today. With the border reopening between Hong Kong and mainland China enacted in early February, coupled with the reduction of Ad Valorem Stamp Duty (AVD) in the 2023/2024 Budget, property buyers have regained confidence in the residential market, with prices rebounding. Residential transactions picked up in Q1 and are expected to record an increase of 49% q-o-q, to approximately 12,500 transactions.
Rosanna Tang, Executive Director, Head of Research, Hong Kong, Cushman & Wakefield, said: “The border between mainland China and Hong Kong has reopened, prompting improved market sentiment and buyers' confidence. Some buyers moved quickly to seize opportunities in the relatively attractive market before prices fully rebounded. Property inquiries and inspections have also increased from the previous lows of last year. The recent government-announced reduction of AVD for residential properties will benefit first-time home buyers and spur demand for small-to-medium-sized properties below the HK$10 million mark. Property transactions will likely gain pace as some developers are now accelerating their launches of new home sales."
Edgar Lai, Senior Director, Valuation and Advisory, Hong Kong, Cushman & Wakefield added: “The latest government data reveals that Hong Kong’s overall residential property price level in January 2023 ended a consecutive seven-month decline to rise a modest 0.6% YTD, although this price point is still 15% lower than the peak recorded in 2021. Property prices recovered across market segments, with some housing estates even recording mild V-shaped rebounds. Among them, prices at City One Shatin, representing the mass market bracket, rose by 20% q-o-q. Taikoo Shing, in the middle market, recorded an increase of 11.3% q-o-q. Prices at these popular housing estates had been on a downtrend in H2 2022 and underperformed the overall market, mainly due to the impact of rising interest rates and previous stock market volatility. However, the mainland China-Hong Kong border reopening has given these estates a strong boost, with some owners firming up their asking prices due to the more promising outlook. As for the luxury housing segment, prices edged down only slightly in 2022 on the back of strong holding power from luxury homeowners, and hence the price rebound was generally less noted than in the mass market given the large lump sum commanded by such properties. Prices at Residence Bel-Air, representing the luxury market bracket, rose by 5.3% q-o-q."
Commenting on the market outlook, Edgar Lai shared: “In terms of primary market supply, we expect developers to focus on launches for mass market and mid-to-low priced properties, in key areas such as Hong Kong Island South, Kai Tak, Northwest New Territories, Sai Sha, and Pak Shek Kok. With the support of the AVD reduction policy, we anticipate that first-time home buyers and upgraders will quicken their pace to enter the market, while mainland buyers will renew their activity to support the recovery in transaction numbers. Considering the low base of transactions last year, it is expected that the annual residential transaction count will rise by 25% to 35% y-o-y, reaching about 58,000 to 60,000 transactions by the end of 2023.”
Rosanna Tang concluded: “Given that interest rates have yet to peak, and geopolitical and economic uncertainty may still impede a full recovery, the residential market may experience fairly sluggish property price movements in 2H this year. Nevertheless, we are delighted to see the government’s active measures to reopen the city, which will help to expedite the return to normalcy in the broader economy and society. Over the long run, we believe that mainland buyers will be integral in supporting a full property market recovery in Hong Kong. The city’s overall property price level is expected to rise by 5-10% for the full year in 2023, and this will be mostly reflected in the 1H period.”
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global real estate services firm that delivers exceptional value for real estate occupiers and owners. Cushman & Wakefield is among the largest real estate services firms with approximately 52,000 employees in over 400 offices and 60 countries. In Greater China, a network of 23 offices serves local markets across the region, earning recognition and winning multiple awards for industry-leading performance. In 2022, the firm had revenue of $10.1 billion across core services including valuation, consulting, project & development services, capital markets, project & occupier services, industrial & logistics, retail and others. To learn more, visit www.cushmanwakefield.com.hk
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