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[The policy anniversary effect fell short of expectations] On February 28 last year, the Hong Kong government announced the complete abolition of its "tough measures" in the property market, including additional stamp duty, buyer stamp duty and new residential stamp duty, in an effort to activate the market. The latest data from Centaline Property Agency shows that although the policy has led to a short-term rebound in transaction volume, it has failed to reverse the downward trend in housing prices. As of January 2025, the total market value of private residential properties in Hong Kong has fallen by another HK$480 billion compared to before the withdrawal of the stimulus package, equivalent to a reduction of HK$470,000 in the average net worth of each owner. If compared with the high level of housing prices in 2021, the cumulative evaporation is as high as HK$2.83 million.
The rebound in trading volume was short-lived, with volume increases and price drops becoming the main theme
Centaline Property Asia Pacific Vice Chairman Chen Yongjie pointed out that the market experienced a "V-shaped fluctuation" after the withdrawal of spicy food:
– The average monthly transaction volume in the first quarter of 2023 was 2,873, and it soared by 89% to 5,387 in the second quarter.
– The popularity dropped sharply in the third quarter, with the monthly average falling to 3,017 cases
– The October Policy Address added mortgage relaxation and investment immigration optimization, and the number of cases rose to 4,554 in the fourth quarter.
The total number of private home transactions for the whole year was 45,773, an increase of 32.71% year-on-year, but prices continued to bottom out. Although the new property market recorded 15,000 transactions in 2024 (annual +55%), and developers cashed out HK$195.2 billion (annual +80%), this was achieved through a "price-for-volume" strategy, further squeezing the secondary market.
Structural dilemma: circulation rate hits a record low and the second-hand market is in an ice age
Data reveals a deeper crisis:
- The second-hand property turnover rate has been below 2% for three consecutive years, and will be only 1.8% in 2023, lower than the SARS period in 2003 (2.1%), and far lower than the peak of 8% in 1997
– There are more than 22,000 first-hand units in stock, and developers are entering a “clearance cycle”. Price wars have exacerbated pessimistic market expectations.
– High interest rates and lack of economic confidence have led to a strong wait-and-see attitude among buyers
Policy crossroads: Industry calls for more stimulus measures
Chen Yongjie bluntly stated that the current policy strength is not enough to support the stabilization of housing prices, emphasizing that "the market is booming but the prices are not booming" reflects that the market still needs a shot in the arm. With the new Budget to be announced on February 26, the industry is looking forward to the government launching a combination of measures to boost the economy, including:
1. Further relax mortgage ratios and stress tests
2. Expand the attractiveness of the investment immigration program
3. Provide tax incentives for first-time homebuyers and home changers
4. Accelerate the absorption of foreign talents to drive housing demand
Future Outlook: The key to bottoming out housing prices lies in rebuilding confidence
The report warns that if there is no policy breakthrough, the property market may fall into a vicious cycle of "low transactions and low valuations." However, as the Federal Reserve's interest rate hike cycle draws to a close, if Hong Kong can effectively boost confidence in its economic outlook and cooperate with developers to gradually digest their inventory, there may be signs that housing prices have stopped falling in the second half of 2024. Whether the opportunity can be seized to reverse the downward trend will test the government and the market's ability to coordinate and respond.
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