Hong Kong’s upscale housing sector, impacted by significant price cuts due to rising interest rates and economic instability, is displaying initial signs of steadiness as bargain hunting emerges in one of the globe’s most expensive property markets.
According to CBRE, luxury property prices in the city dropped approximately 8% in 2023 and 15% from their peak in July 2018. Despite this decline, Knight Frank reported a 31% year-on-year surge in the number of transactions involving units priced at US\(10 million or higher, with a total of 173 deals recorded last year. The value volumes also saw a 13% increase year on year, amounting to HK\)25.5 billion.
Savills Hong Kong, the appointed property agent, revealed that a three-story detached residence at 15 Moorsom, Jardine’s Lookout, spanning about 3,154 sq ft with two parking spaces, is now on the market at a 17% markdown from its original price. The asking price has been adjusted from HK\(230 million to HK\)190 million by the current owners, a local business family, as stated by Thomas See, senior associate director at Savills.
In a recent transaction, a mainland Chinese buyer acquired an ultra-luxury house at the Peak in Hong Kong at a 35% discount. The property at 25-26 A&B Lugard Road was sold for HK\(838 million, with an average price per square foot of HK\)71,703, as reported by Godfrey Cheng, deputy senior director of the investment CEO office at Savills Hong Kong.
Thomas See highlighted that the price reductions are attributed to factors such as high interest rates and economic uncertainties. He noted that discounted prices have become a prevailing trend, with buyers showing more interest in properties priced below the market rate.
Anticipating a surge in transactions in the near future, See suggested that government initiatives to stimulate the property market in the upcoming budget plan could drive this rebound. Speculations are rife that the finance chief, Paul Chan Mo-po, might further relax property market restrictions during his budget speech on February 28, following Chief Executive John Lee Ka-chiu’s adjustments to some curbs in the previous year’s policy address.
The real estate market sentiment has cooled during the Lunar New Year, with an increase in outbound travel and prospective buyers awaiting the budget plan announcements. Only 13 first-hand transactions were recorded during the holiday period, marking an eight-year low, while second-hand transactions hit a 23-year low with only four recorded from 35 housing estates, according to property agency Midland Realty.
Freddie Wong Kin-yip, chairman of Midland, suggested eliminating cooling measures entirely, citing risks to Hongkongers’ assets posed by declines in both the real estate and stock markets. He pointed out various unfavorable factors affecting the property market, including a rise in homes with negative equity, a surplus of new flats, reduced transactions, and a slump in property prices.