After the Hong Kong government withdrew the promotion at the end of February, there has been a recent slowdown in residential sales. The price of new listings was discounted by more than 20% compared to the price of neighboring new listings before the suspension was removed.
The Zhitong Finance App learned that on May 30, JLL released the “Hong Kong Residential Sales Market Overview”. After the Hong Kong government removed the market at the end of February, residential transactions have recently slowed down. The discount on new listings after the withdrawal was more than 20% compared to the price of neighboring new listings before the withdrawal, indicating that the stimulating effect of the withdrawal on the property market has diminished. Second-hand property prices are expected to continue to fall in the short term due to high interest rates and the new property price reduction war.
The average price of new listings sold after the removal of spicy sales dropped significantly. For example, discounts on new projects such as Long Yin Fung in Man Tin and The YOHO Hub II in Yuen Long were more than 20% lower than the neighboring projects launched during the promotion period in the past.
In terms of property market transactions, residential transactions showed strong month-on-month growth after the withdrawal of the market. Among them, the number of building unit sales contracts in April was the highest since 2012. However, the bank believes that this surge is due to the release of the backlog of demand in the past, and it is expected that this figure will fall in the next few months. It is worth noting that as a forward-looking indicator of the number of building unit sales contracts, the number of temporary first-hand building unit sales contracts reached about 4,200 in March, but dropped to about 1,700 in April, reflecting signs of a slowdown in the market.
Li Yuanfeng, senior director of JLL's project strategy and consulting department, said that due to strict foreign exchange controls, non-local buyers need more time to prepare capital to buy a home, especially for users. As a result, although the share of mainland buyers among overall buyers rose significantly after the withdrawal of the country, their rising desire to buy homes may not immediately be reflected in the Hong Kong property market.
In the second-hand market, property prices recorded a month-on-month increase of only 1.1% in March this year, which is still insufficient compared to the market conditions after customs clearance last year. Considering that property prices increased by 2.5% monthly after full customs clearance in March 2023, second-hand transaction cases in some large housing estates in April reflect further price reductions.
Chung Chu-ru, senior director of JLL's research department, pointed out that second-hand property prices are expected to continue to fall in the short term due to high interest rates and first-hand market price wars, but in the long run, a fall in interest rates, improved rental returns, mainland economic growth, and potential policies to ease cross-border exchange controls for home purchases will help the property market recover.