Hong Kong residential transaction volume expected to have hit a new low in 2022

Estimates show there were only 45,000 transactions for the whole year.

In a press release, analysts at Knight Frank said given the weak performance of the local stock market, shrinking labour force, rising mortgage rates and the rapid deterioration of the global economic situation, the decline in Hong Kong residential property prices has accelerated significantly in the second half of 2022, and will fall by nearly 15% for the whole year. 

“The transaction volume is also expected to hit a new low, with only 45,000 first-hand and second-hand transactions throughout the year,” said Martin Wong, Director and Head of Research & Consultancy, Greater China.

Here’s more from Knight Frank:

Unless the government eases property cooling measures, it is unlikely for home prices to rebound in the short term due to the lack of positive news in the market. The competition between first-hand and second-hand markets has intensified owing to the slowdown of the pace of new project launches and stockpiling of unsold flats. The poor performance of the property market has affected the Government's land sales revenue. It is estimated that the land sales revenue in 2022 will only be about HK$35 billion, a significant drop of 68% YoY.

Since the current real interest rate has exceeded 3%, it has begun to have a certain impact on the purchasing power of homeowners. Looking forward to 2023, mass residential property prices in Hong Kong will fall by 5-10%, and luxury residential property prices will fall by 0-5%. We expect the total volume of first-hand and second-hand transactions will edge up slightly to 48,000-53,000, of which first-hand transactions account for 30%.

This year, the pace of the Government’s land sale is slower than expected. We expect the sale of certain sites in the current land sale programme to be delayed until 2023. It is estimated that the revenue from land sales in 2023 will reach HK$50-70 billion, while the annual land premium is expected to reach HK$35-40 billion.