Hong Kong residential transactions slip 1.5% to 2,869 in March

Secondary sales accounted for 94.4% of all transactions.

Hong Kong’s residential market was quiet in March, but purchasing momentum in the secondary market gradually picked up, says Knight Frank. 

Data from the Land Registry reveal that 2,869 residential transactions were recorded in March, edging down 1.5% MoM. Of these, secondary sales dominated, with 94.4% of the overall transaction volume and 2,708 cases recorded, for an increase of 11.4% MoM. 

Here’s more from Knight Frank:

In the sales market, both potential buyers and homeowners were cautious about their sale decisions. In the buyer’s market, more homeowners were willing to provide wider room for price negotiation to potential buyers. There were a number of transactions of properties from HK$20 million to HK$30 million. Among the notable transactions was a 4,176-sq-ft house at 2 Grampian Road in Kowloon Tong, which was sold for HK$125 million, or HK$29,978 per sq ft.

Local movement remained the core driver of the leasing market. Viewing activity started to be active again, as more rental homes became available in the market. 

Large, high-priced units were leased out quickly. For instance, a 10,344-sq-fthouse at 11 Plantation Road on The Peak was rented for HK$1 million per month, or HK$97 per sq ft. Amid the market uncertainty, more tenants preferred flexible lease terms and tended to renew their existing leases to reduce costs. 

The Hong Kong residential market has entered a rate hike cycle. Following the Fed’s move, the Hong Kong Monetary Authority (HKMA) raised the base lending rate by 25 basis points to 0.75%. However, we do not expect local Hong Kong commercial banks to follow the pace and frequency of future Fed rate hikes. 

Therefore, we believe the current interest rate rise will not erode the overall purchasing power in the market and will not put immediate and significant pressure on Hong Kong’s property prices in the near term. We also expect to see a positive effect of mortgage relaxation and the residential market to regain momentum as the local pandemic outbreak is controlled in the coming weeks.