Hong Kong’s property market is sluggish but rental market is booming

Hong Kong’s property market is sluggish but rental market is booming

Recently, Hong Kong's property market has continued to slump, with transaction volume hitting a new low since the end of the period. Centaline Real Estate data shows that new home transactions fell back to 660 units in June, the lowest level since the withdrawal of the stimulus in February 2024. At the same time, the rental market is extremely hot. The rental index in June was 189 points, a 4.5-year high. In the first half of the year, rents increased by 1.6%. There is a clear differentiation between the buying and renting markets. Some netizens joked that a Hong Kong agent had just mastered Mandarin, but unexpectedly, mainland clients stopped coming. On the one hand, the continued decline in housing prices has led to an increase in the number of people holding currency to buy. On the other hand, the rental market continues to be strong, driving rents to continue to rise, and the market has become complicated.

Mainland buyers’ transaction volume hits record high in first half of the year

Despite the recent downturn in the property market, the transaction volume of mainland people buying houses in Hong Kong in the first half of 2024 hit a 29-year high. Centaline Real Estate data shows that in the first half of the year, there were 6,117 Mandarin and Pinyin buyer registrations in Hong Kong, a year-on-year increase of 70%, with a total amount of 70.54 billion yuan, a year-on-year increase of 42%, setting a new record since 1995. This is mainly due to the Hong Kong government’s policy of comprehensively withdrawing spicy food in February 2024. At that time, mainland buyers had the same rights as local Hong Kong residents to buy houses and did not need to pay the 7.5% buyer's stamp duty and new home stamp tax. The additional stamp duty of 7.5% for Hong Kong residents' second homes and the 20% additional stamp tax for resale within 6 months were all cancelled. .

New home developers offer discounts

Affected by the downturn in the property market, new home developers have launched large-scale discounts. After the withdrawal of hot spots in April, the Blue Coast real estate project in the southern district of Hong Kong Island under the Cheung Kong Group went on sale for the first time at a low price, with 422 units for sale at an average price of HK$21,900 per square foot. Compared with the surrounding second-hand houses, it is equivalent to a discount. 30% off. Especially the newly opened properties in July, located in Kai Tak and Gold Coast, Hong Kong, are almost all priced at the lowest price in the same area, and even the lowest price for new houses in Hong Kong. In addition, the U.S. interest rate hike cycle has led to an increase in Hong Kong mortgage interest rates. In addition, mainland buyers are less interested in buying houses, and most Hong Kong people have turned to renting.

Talent plan triggers small explosion in rental demand

Since 2023, Hong Kong has stepped up its efforts to implement the Talent Plan, lowered the threshold for introducing talents, and has seen a small explosion in rental demand. According to data from the Rating and Valuation Department of Hong Kong, the rental index in June 2024 was 189 points, a month-on-month increase of 0.16%, hitting a four-and-a-half-year high.