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The effect of the withdrawal of the hot policy has faded and the property market has entered a period of deep adjustment
It is almost one year since the Hong Kong government completely lifted its "tough measures" on the property market. According to the latest research by Centaline Property, the total market value of 1.28 million private residential units in Hong Kong has evaporated another HK$480 billion after the lifting of the tough measures. The average house price has fallen by 28% from its high before the lifting of the tough measures to HK$6.99 million, equivalent to a book loss of HK$2.83 million for each owner. It is worth noting that even though mainland buyers contributed more than HK$120 billion in transaction volume, it is still difficult to reverse the market downturn.
Market data overview
• Total value evaporated: The total market value of residential properties has plummeted from a peak of HK$12 trillion in 2021 to the current HK$8.99 trillion
• Price index: The Centaline City Leading Index (CCL) fell 28% from its historical high and 5% from before the withdrawal of the hot market
• Trading volume fluctuations: The trading volume in the quarter after the withdrawal of the hot money policy has been a roller coaster trend, from a peak of 5,387 in the second quarter to 3,017 in the third quarter.
• A new low in circulation rate: The circulation rate in the second-hand market is only 1.8%, the worst record in the past 30 years
Mainland buyers become the main force, Kai Tak becomes a "Mandarin-speaking community"
According to Centaline data, buyers registered in Mandarin Pinyin made a significant contribution:
✓ Annual transaction volume was 11,522, a year-on-year increase of 80%
✓ Total transaction volume was HK$128.28 billion, accounting for 30.81% of the total market
✓ Kai Tak New Area was the most popular, with 1,519 transactions by mainland buyers
✓ Purchasing power is concentrated in properties worth tens of millions of yuan, accounting for 38% of the relevant transaction volume
Second-hand market hits historic low
Chen Yongjie, president of the residential division, pointed out that developers offering large discounts on their properties triggered a "price stampede", which led to a vicious cycle in the secondary market:
- The circulation rate has been below 2% for three consecutive years, which is more severe than the 2.1% during the SARS period in 2003.
– There are 22,000 new units left, and it is estimated that it will take 2 years to clear the inventory
– Interbank offered rates remain high at 5%, and expectations of rate hikes continue to suppress purchasing power
Policy expectations become the key to the market
Faced with a "technical bear market" in the property market, the industry urges the government to take a multi-pronged approach to boost confidence:
① The fiscal budget should include targeted tax incentives to activate the housing exchange chain
② Accelerate the approval of infrastructure projects to drive regional economic synergy
③ Optimize the talent housing plan and expand the scope of tax deductions
④ Consider sharing property policies with the mainland and establishing a linkage mechanism for the Greater Bay Area property market
Market analysts believe that current housing prices have already given up the gains in 2017. Theoretically, there is room for a technical rebound, but this requires substantial economic recovery measures. As the Federal Reserve's interest rate hike cycle comes to an end, if the SAR government can introduce structural reform policies and cooperate with developers' reasonable pricing strategies, there may be an opportunity for the property market to stabilize in the second half of 2024.
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