Housing Prices in Hong Kong Continued to Decline in September
Hong Kong's housing market experienced a decline for the fifth consecutive month in September. Official data released on Tuesday indicates the ongoing downturn in the real estate sector. Experts predict that the market is nearing its bottom following recent policy measures.
Private home prices in Hong Kong fell by 1.7% in September compared to the previous month. Overall, prices have decreased by 7.5% since December. Moreover, housing values have dropped by 27.7% from their peak in 2021, hitting the lowest level since August 2016. This decline is attributed to various factors, including rising mortgage rates, the emigration of professionals, and general pessimistic market outlook.
Despite the downturn, real estate professionals are exhibiting cautious optimism. Eddie Kwok, CEO of CBRE Hong Kong, stated, "After five months of decline, we may soon see housing prices reaching their bottom." Martin Wong, Senior Director at Knight Frank, forecasts a further price drop of about 8% by the end of the year and anticipates a recovery as interest rates begin to decrease.
UBS analysts predict that housing prices could increase by up to 5% in 2025 due to growing demand from mainland China and falling mortgage rates. This optimistic outlook follows the decision in February to remove the additional stamp duty imposed on foreign buyers.
Hong Kong's real estate market, known for its exorbitant housing costs, has seen a decline in demand since May following a brief rebound after the removal of all property purchase restrictions in February. Realtors note that much of the pent-up demand has been met, and property developers are offering new apartments at significant discounts to stimulate sales.
To revitalize the market, the government has recently implemented measures, such as reducing the down payment requirement to 30% for all properties. Additionally, the government has expanded the investment immigration program to include luxury residences priced above HK$50 million (US$6.43 million).
In a related development, major banks in Hong Kong, including HSBC and Bank of China (Hong Kong), cut their primary lending rates by 25 basis points in September, following the actions of the U.S. Federal Reserve. This reduction was unexpected, as the Hong Kong currency is pegged to the U.S. dollar, and local banks typically set their rates independently based on their funding costs.