Select Language:
Hong Kong’s property market is showing signs of recovery as new home sales in the first ten months of the year surpass the total for the previous year, supported by favorable factors such as tax rebates.
As of October 27, approximately 15,900 new homes had been sold in Hong Kong this year, compared to 15,839 for the entire last year. Last month alone, sales exceeded 1,700 units, maintaining over a 1,000-unit sales figure for nine consecutive months.
The market’s rebound is driven by several factors, including reduced property purchase taxes, declining mortgage rates, and a steady rebound in rental yields that have influenced asset allocation trends.
In February of last year, the Hong Kong government eliminated the Special Stamp Duty, Buyer’s Stamp Duty, and New Residential Stamp Duty. Consequently, stamp duty rates for local buyers fell from 7.5 percent to 1.5 percent, and rates for mainland Chinese buyers also decreased by about 10 percent.
Anticipating a cut in U.S. interest rates and a resurgence in the local IPO market, the Hong Kong Monetary Authority injected approximately HKD 129.4 billion (about USD 16.6 billion) into the market in May. This led to a sharp drop in the one-month Hong Kong interbank offered rate, falling to around 0.7 percent between May and July, which helped reduce mortgage rates to roughly 2 percent.
The private residential rent index in Hong Kong increased for the tenth straight month in September, reaching its highest level since August 2019, according to recent data from the Hong Kong Rating and Valuation Department. “From May to July, many tenants transitioned directly into buyers,” said Li Wei, Chief Operating Officer at a local property firm.
A recent mainland Chinese buyer remarked that the annual rental yield on his new Hong Kong property approaches 4 percent, significantly higher than the approximately 1.5 percent yield on comparable properties in nearby Shenzhen.
The share of buyers from mainland China is also on the rise. During the first three quarters, mainland buyers completed around 9,900 transactions worth HKD 94.1 billion (about USD 12.1 billion). The total for the year is expected to surpass 12,000 deals, breaking last year’s record of 11,600.
Interest from clients in South Korea and Singapore—including professionals at local investment banks and Asian corporations—has also increased, noted Li. “It’s been a long time since foreigners have shown such interest in property here.”
Since March, housing prices in Hong Kong have rebounded over 4 percent, and projections suggest they could rise an additional 5 percent by the end of next year. Factors contributing to this outlook include the wealth effect from a resilient stock market, release of pent-up demand, anticipated lower mortgage rates, rising rents, strong interest from mainland buyers, and a recovering financial sector.
ChatGPT
Perplexity
Gemini AI
Grok AI
