A residential housing complex is seen in Hong Kong on Dec 18, 2018. (PHOTO / AFP)
Hong Kong’s residential market sector bottomed out in 2022 and may register a moderate price increase this year, buoyed by the special administrative region’s boundary reopening with the Chinese mainland and the reduction of ad valorem stamp duty in the 2023-24 Budget, real estate analysts said.
“The border between Hong Kong and the mainland has reopened, prompting improved market sentiment and buyers’ confidence, while the AVD reduction for residential properties will benefit first-time homebuyers and spur demand for small- to medium-sized properties below the HK$10 million ($1.27 million) mark,” predicted Rosanna Tang, executive director and head of research at Cushman & Wakefield Hong Kong.
Edgar Lai, senior director of valuation and advisory at Cushman & Wakefield Hong Kong, said some popular housing estates such as City One Shatin and Taikoo Shing have seen mild V-shaped price rebounds
“The city’s overall property price level is expected to rise by 5 to 10 percent for the full year of 2023, and this will be mostly reflected in the first half period,” Tang said at Thursday’s news conference.
Edgar Lai, senior director of valuation and advisory at Cushman & Wakefield Hong Kong, said some popular housing estates such as City One Shatin and Taikoo Shing have seen mild V-shaped price rebounds, with some homeowners raising their asking prices because of a more promising outlook.
Considering the low base of transactions last year, Lai said he expects annual residential transactions to rise by 25 percent to 35 percent year-on-year, reaching about 58,000 to 60,000 transactions by the end of 2023.
Total sales and purchases of residential buildings were around 45,050 cases in 2022, down 39.4 percent from the previous year, according to the Land Registry’s data.
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One of the most unaffordable home markets in the world saw prices fall more than 15 percent last year, ending a 13-year rally as it posted the largest annual loss since 1998. Home prices were weighed down by a weak economic outlook following a COVID-19 outbreak early in 2022, and rising mortgage costs because of US interest rate hikes.
CBRE Hong Kong Valuation and Advisory Services Senior Director Eddie Kwok added: “Investment sentiment (for residential units) turns positive with a gradual recovery in buyers’ confidence as the Hong Kong-mainland border reopens. Looking forward, residential price may bottom out as soon as in the first quarter on the back of a more optimistic overall economic outlook and improved atmosphere.”
Kwok argued that more residential buyers will enter the market as the interest rate stabilizes, because when interest rates are expected to be at their peak in the second half, the recovery in business flow and revenue growth will gain stream even though higher financing costs will continue to weigh on residential property investment demand.
“We expect property prices will decline a further 5 percent to 10 percent in the first half of 2023, because of the slow macroeconomic recovery, elevated interest rates and weak capital market performance. But expectations of gradual border reopening and solid end users’ demand cap the prospects of a steep decline,” according to the Moody’s Investors Service report.
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A downward correction in property price led to an increase in the number of residential mortgage loans in negative equity in Hong Kong to an 18-year high at the end of December 2022. However, the mortgage delinquency ratio remains at a low level.