Hong Kong's Housing Market Slumps for Fifth Month: What’s Next?

Hong Kong Home Prices Drop for Fifth Straight Month: Is Recovery in Sight?

Hong Kong’s property market saw a fifth consecutive monthly decline in home prices in September, according to official data. As real estate values hit their lowest levels since August 2016, experts are closely watching for a potential market rebound fueled by government policies and interest rate cuts.

Key Reasons Behind the Decline

Hong Kong, one of the world’s most expensive housing markets, has experienced declining demand since May. A temporary surge in early 2023, spurred by lifted property purchase restrictions, faded as buyers became sated. To counteract this slump, the Hong Kong government recently eased the down payment requirement to 30% and allowed luxury home purchases over HK$50 million to count toward its investment immigration scheme.

Notable Statistics

- September Drop: Home prices fell 1.7% from August.

- Year-to-Date Decline: Prices are down 7.5% since December 2023.

- Peak Comparison: Prices have decreased by 27.7% from the 2021 peak, now at a seven-year low.

Expert Insights

Eddie Kwok, Executive Director at CBRE Hong Kong, predicts home prices may soon stabilize. Martin Wong of Knight Frank estimates an 8% drop for 2024 but anticipates a gradual rebound starting next year. UBS projects a potential 5% increase in home prices by 2025, driven by Chinese demand and declining mortgage rates.

Market Influences

Hong Kong’s major banks, including HSBC and Bank of China, cut their lending rates by 0.25% in September, aligning with the U.S. Federal Reserve’s rate reduction. Though Hong Kong’s currency is pegged to the U.S. dollar, local banks adjust rates independently based on funding costs.