Residential Real Estate News
Hong Kong Housing Market Benefits from Mainland China Policy Stimulus
Recent rate cuts and rising stock prices offer positive news for Hong Kong's property market. However, the weak economy and cautious pricing from developers persist. With 109,000 housing units available and a potential influx from the primary market, pressure on secondary market prices will remain, according to JLL's latest Residential Market Monitor.
Bruce Pang, Head of Research at JLL Greater China, noted: "While multiple rounds of government policy easing on residential mortgages and stamp duties have collectively improved affordability more than this single 25 bps rate cut, they have not yet restored sustainable buyer confidence. The rate reduction alone is unlikely to reverse the ongoing downward trend, as the property market is primarily influenced by Hong Kong's broader economic conditions."
Primary market transactions in the first eight months of 2024 have already surpassed the total for all of 2023. Cash-rich buyers, who are less affected by interest rates, have already entered the market. Therefore, repeating this high level of activity is unlikely. Following the recent rate cut, the primary market recorded 94 transactions in one week, representing just 10.2% of the 918 deals seen during the first week after the relaxation of cooling measures.
Cathie Chung, Senior Director of Research at JLL Hong Kong, remains bearish about the market for the rest of the year, citing several challenges facing the residential sector:
- Slowing income growth: Median household income grew by just 2.1% year-on-year in the first seven months of 2024, a notable drop from the 5.3% growth seen in the same period in 2023.
- Declining business confidence: The Purchasing Managers' Index (PMI) remained below 50 for the fourth consecutive month in August, reflecting ongoing pessimism in business sentiment.
- Weakening government finances: The government reported a fiscal deficit of HKD 135.4 billion for the first four months of the current financial year.
In the meantime, developers continue to set conservative pricing for new units. Following the rate cut, SHKP launched 182 units for 'Cullinan Sky (Phase 1)' at an average price of HKD 19,668 per square foot, the lowest for new projects outside Kai Tak's runway area in seven years. This price is also 6.7% below the HKD 21,088 per square foot average for HENLEY PARK, a nearby development by Henderson Land launched in June 2023.
Norry Lee, Senior Director of JLL's Projects Strategy and Consultancy Department in Hong Kong, commented: "With a substantial supply of 109,000 housing units, demand will likely shift towards the primary market, placing downward pressure on secondary market prices. Although recent stock market gains, spurred by policy stimulus in mainland China, could create a positive wealth effect for the property market, a sustained recovery in homebuying sentiment will take time. This will largely depend on broader economic recovery and Hong Kong's ability to reignite business growth."
