Why April home sales were lacklustre in Hong Kong
Primary sales declined by 13.3% during the month.
High interest rates have begun to weigh on market sentiment and challenge affordability in Hong Kong according to Knight Frank, evidenced by a significant reduction in transactions in April after the upbeat market in March.
Residential transactions in April dropped by 31.5% MoM to 4,583, according to data from the Land Registry.
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Sales in primary and secondary markets fell by 13.3% and 38.1% MoM, respectively. The slowdown in home sales was also due to the large amount of outbound travel by Hong Kong residents over the long Easter and Ching Ming holiday.
However, luxury market continued its resilient performance. There were more enquiries by Chinese mainland buyers, which translated into more big-ticket transactions. During the month, a 7,042-sq-ft house at Mount Nicholson at The Peak, was sold for HK$577 million or 81,400 per sq ft; and a 4,016-sq-ft house at Central Peak in Mid-Levels East, was sold for HK$409.6 million or HK$102,000 per sq ft.
Things were relatively quiet on the luxury leasing front. There are more listings in the market, particularly units with monthly rents between HK$100,000 and HK$200,000, which is expected to exert some downward pressure on rents and lead to longer flat listing periods. Notable transactions during the month include a 2,090-sq-ft unit at Ultima in Ho Man Tin, which was leased for HK$170,000 per month or HK$81 per sq ft.
In the near term, we expect primary projects to continue to draw attention, as developers will continue their aggressive sales approach to attract potential buyers. Factors such as the high interest rate environment and the increasing number of new flats will add pressure to home prices, and housing demand is likely to be hobbled by the rising financing costs for some time.
However, supported by the inflow of overseas professionals and talent under the government’s advocacy, we expect both the residential sales and leasing markets to show more obvious improvement in the second half of 2023.