Hong Kong residential transaction volume hits 7-month low in September

Transactions dropped 22% MoM to 2,848 during the month.

Despite the prospects of lower interest rates, Knight Frank analysts said the downward trend in Hong Kong property prices showed no sign of abating. 

According to the Rating and Valuation Department, home prices declined for the fourth consecutive month, dropping by 1.7% MoM in August, and 6.2% YTD, reaching an eight-year low. 

Here’s more from Knight Frank:

The total transaction volume declined for the fifth consecutive month, plunging by 22% MoM to 2,848 in September, the lowest level since February this year. First-hand transactions dropped more than 50% MoM following a sharp surge to 1,154 transactions. Both buyers and sellers were waiting for potential new measures to be announced in the Policy Address and further interest rate cuts. 

Following the recent interest rate cut, developers are capitalising on the opportunity to aggressively launch new projects with attractive discounts. In Happy Valley, One Jardine’s Lookout offers units at an average price of approximately HK$17,900 per sq ft after discounts, marking the lowest price for first batch units in 13 years. In Kai Tak, first-round sales of 300 units in Cullinan Sky received an overwhelming response, with an oversubscription of nearly 142 times, thanks to its proximity to an MTR station and shopping mall. 

On the leasing front, overall rents increased for the sixth consecutive month, up 1.1% MoM and 6.8% YoY. In the first eight months of the year, rents have risen by more than 6%. In the luxury residential segment, in contrast, there is greater flexibility for negotiating rents. For instance, in Pokfulam, the asking rent of a townhouse was reduced by over 20% to approximately HK$130,000 per month.

Policy Address 2024 announced a relaxation in the loan-to-value ratio cap for all property mortgages to 70%. With lower interest rates, we are now seeing more high-income local and overseas professionals to enter the mid-to-high-end residential property market. This is a good sign and bodes well with a longer-term recovery. Nonetheless, we expect the overall property prices to remain under pressure in the near term, as despite recent rate cuts, interest rates remain relatively high, and secondhand properties continuing to struggle due to aggressive primary sales.