Hong Kong property: home prices slump to lowest since January 2017 as high interest rates undercut demand

“The market sentiment is still weak, as there is limited good news in the market,” said Martin Wong, director and head of research and consultancy for Greater China at Knight Frank.

Hong Kong’s lived-in homes segment is likely to endure more pain in the first half, with prices likely to drop by as much as 5 per cent before stabilising in the second half of the year, Wong said.

The city’s residential market, one of the world’s most unaffordable, has been bruised by high interest rates which, at 5.75 per cent, are at their highest level since December 2007. China’s uncertain economic outlook and the city’s poorly performing stock market, which is off to its worst start in seven years, are also keeping buyers at bay.

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Market observers expect the property market’s prospects to improve as interest rates drift lower in the latter half of the year.

In 2023, 36,268 lived-in homes changed hands, the lowest tally since 1997, according to data compiled by property agency Midland Realty. As of January 26, 2,366 secondary units were sold in the month, slightly higher than the 2,154 units in December.

In December, 3,106 new and lived-in homes were sold, according to Midland. In November, that figure stood at 2,767 units while in October the total was 2,263.

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How Hong Kong’s housing market became among the world’s most unaffordable

How Hong Kong’s housing market became among the world’s most unaffordable

Following Chief Executive John Lee Ka-chiu’s policy address in late October, the government halved the buyers’ stamp duty to 7.5 per cent for non-permanent residents and residents buying a second or additional home.

The special stamp duty of 10 per cent was also waived for homeowners who resell their property after two years, from the previous three-year requirement. Eligible overseas talent have also been exempted from paying stamp duty on property purchases unless they fail to become permanent residents.

Meanwhile, the city’s rental index rose 6.6 per cent in 2023 to 187.1, the highest since December 2019, according to government data.

Rents in the city are likely to continue rising because of ongoing demand from newcomers, according to Knight Frank. The consultancy expects rents to increase between 5 per cent and 8 per cent this year, it said in a report recently.