Hong Kong mass housing price growth to hit up to 3% this year

Meanwhile, luxury home prices could jump by 3-5%.

Knight Frank says Hong Kong's residential market sentiment was positive amid a vibrant market in November, with both primary and secondary sales recording an uptick in transaction volume. According to the Land Registry, 5,409 residential units were sold in November, up 16.5% MoM. Total sales value edged up 3.2% to HK$51.3 billion. 

Here's more from Knight Frank:

Primary sales continued to be robust, rising 45.6% MoM to 1,854 units. Hang Lung Properties’ new residential project in Kowloon East, The Aperture, was oversubscribed by 14 times in its first batch of flats, and over 75% of the available units were sold. 

There were some notable transactions in the luxury market during the month. For instance, a transaction in Central Peak II reached a record high for Mid-Levels East, with a 3,723-sq-ft-house selling for HK$386.8 million or HK$103,895 per sq ft, indicating continued demand for highquality prime properties. 

As at the end of November, 30 residential projects with 16,011 units were waiting for approval for presales, the highest number since August 2018. More new flats are expected to hit the market in the coming quarters. 

With fewer residential plots being tendered through government auction, some developers have increased their land bank by applying for planning authorization to convert plots approved for non-domestic use to domestic use. Among the notable cases, Star Properties paid a premium of HK$818 million to convert an industrial site to residential development, which is expected to provide about 300 units. 

Going forward, given the gradual economic recovery and the low interest rate environment, we maintain our optimistic outlook for the residential market. We expect mass housing prices to go up by 0% to 3% in 2022, and luxury prices to increase 3% to 5%, given the expected Hong Kong–Mainland border reopening.

With more new projects launches and various finance schemes offered by developers, more purchasing power in the secondary market is expected to shift to the primary market, so we expect the transaction volume ratio of first-hand to second-hand homes to be about 30:70 in 2022, and total residential transaction volume to be about 60,000 to 65,000 units next year.