Hong Kong residential transactions hit five-month high of 4,697 units in October

The total sales value was over HK$37 billion.

Following the US cutting interest rates in November by another 0.25%, six major Hong Kong lenders lowered their prime lending rates for a second time this year by 0.25%. According to a Knight Frank report, even before the second round of rate cuts, home sales in Hong Kong reversed a three-month downturn in October, reaching their highest level in five months.

According to Land Registry data, Hong Kong’s total residential transactions in October reached 4,697 units with a total sales consideration of approximately HK$37.3 billion. “This represented a 65% increase in transactions MoM, up from 2,848 units, and a 79% increase in sales value compared to HK$20.8 billion in September,” Knight Frank said.

Here’s more from Knight Frank:

Notably, first-hand sales in October soared by more than 200% MoM to 1,611 units. Newly launched projects, namely Victoria Harbour II in North Point and Cullinan Sky in Kai Tak have seen impressive sales.

While property transactions were lifted, home prices continued to decline for the fourth consecutive month. Prices dropped by 1.7% MoM in September and 7.5% YTD, reaching their lowest level since August 2016, according to Rating and Valuation Department. With a cumulative correction of nearly 30% in home prices from their peak in 2021, the number of negative-equity cases surged to 40,713 by the end of September, the highest number in 21 years when cases reached 67,575 in Q4 2003.

Luxury homes also experienced a rise in market activity. For properties priced at HK$78 million (US$10 million) or above, the number of transactions increased by 60% MoM in October to 20 cases, with the total consideration soaring by 171% MoM. Notable transactions included a 2,821-sq-ft 3-storey house at The Beachfront in Repulse Bay sold for HK$160 million (or HK$56,717 per sq ft), which was originally listed for HK$200 million in June; and a 8,910-sq-ft house at Peak Road in The Peak sold for HK$1,050 million, or HK$117,845 per sq ft.

Meanwhile, leasing market remained robust, with rental levels hitting a five-year high and rising for the seventh consecutive month in September. Due to a shortage of available leasing units, tenants are willing to pay higher rents. We expect rents to remain upbeat in the near term, with a further increase of 3% to 5% anticipated in 2025, potentially reaching historical highs.

Given these positive factors, including measures to raise the borrowing limit and debt-servicing ratio alongside interest rate cuts, property prices are expected to be close to the bottom. Looking ahead, we anticipate a slight rebound in the overall home prices by 5% in 2025, assuming further rate cuts.