Hong Kong residential transactions hit 4-month low in July

Transactions declined by 15.2% to 3,065 during the month.

Hong Kong’s residential market appears to be reeling according to Knight Frank, with both volume and prices drifting down. 

Overall residential prices recorded a 0.5% MoM decline in June, down for the second consecutive month after a four-month rally in early 2023, further narrowing the YTD gain to 4.3%, according to the Rating and Valuation Department shows. 

Here’s more from Knight Frank:

In addition to high mortgage rates and unsold inventories, the economy remained uncertain in both Hong Kong and the Chinese Mainland with the ongoing spread of contagion risk among Chinese developers. 

Recently, some of China’s leading private real estate developers have shown signs of a liquidity crisis, with missed interest payments on bonds and suspended payments on offshore debt. The Hang Seng Index has slumped accordingly, weighing heavily on sentiment. 

The number of residential transactions struck a four-month low of 3,065 in July, down 15.2% MoM, according to the Land Registry. Among them, primary sales fell by 20.5% MoM, while secondary sales also fell by 13.1% MoM, indicating overall transaction volume remained under pressure.

The luxury residential market was more resilient than the mass market, given the scarce supply and strong holding power of existing owners. According to our data, overall luxury residential prices recorded a monthly drop of 0.3% or 1.8% YTD in July. Major transactions during the month included a 3,736-sq-ft house in Severn 8 at the Peak, which was sold for HK$300 million (or HK$80,300 per sq ft). Another 7,083 sq-ft house in La Villa de La Salle in Kowloon Tong was transacted for HK$254.8 million (or HK$35,973 per sq ft).

The leasing market outperformed the sales market, as we note an increasing number of expat families trickling back to Hong Kong. Leasing demand for high-quality units in the Peak and Southern District saw an uptick. 

Notable transactions were recorded during the month, including a 3,527-sq-ft house on Plantation Road at the Peak, which was leased for about HK$340,000 per month (or HK$96 per sq ft), and a 4,190-sq-ft house in Residence Bel-Air Phase 5 in Pokfulam, which was leased for HK$245,000 per month (or HK$58 per sq ft). 

In addition, the mass market, typically areas around universities, was invigorated by the influx of overseas students prior to the beginning of the new academic year. Under the current market headwinds, sell-offs are set to endure amid weakening purchasing power. Meanwhile, the market is sluggish as prospective buyers are observing whether the Fed will pause the rate hikes in September.