Hong Kong home prices to decline by up to 5% in H1 2024

But leasing could grow by 5-8%.

In a report, Knight Frank said that looking ahead to 2024, the high interest-rate environment will continue to weigh on Hong Kong home prices, leading to a higher number of foreclosed properties. Volume is expected to rise steadily in light of the government's relaxation of “cooling measures” and more incoming Chinese mainland talent. 

“We expect home prices to decline up to 5% in 1H 2024, but leasing momentum to continue, with a 5–8% rise, given ongoing demand from newcomers,” the report said.

Here’s more from Knight Frank:

Residential prices declined at a faster pace as market sentiment deteriorated. Overall residential prices slipped 2.2% MoM in October, and the year-to-date (YTD) decline reached 4%, back to the level in March 2017, according to the Rating and Valuation Department. Thanks to the easing of property stamp duties, residential transaction volume rebounded considerably in November, with the total number of transactions surging by 20.3% MoM, the Land Registry shows. Primary and secondary sales rose by a significant 53.7% and 13.6% MoM, respectively.

Launches in the primary market continued to be the spotlight, as developers offered deep discounts and flexible mortgage schemes to clear unsold inventories. Some developers were willing to provide longer completion times to buyers and higher commissions to agents to increase their competitiveness in the challenging market. 

Notable transactions recorded during the month included a 4,395- sq-ft high floor unit in Tower 2, Mont Verra in Beacon Hill, which was sold for HK$258.2 million (or HK$58,793 per sq ft). Another 3,237-sq-ft high floor unit in Tower 2, University Heights, in Mid-Levels West was sold for HK$254.3 million (or HK$78,560 per sq ft). 

Rental rates, in contrast, have thrived, but the gains slowed down, with a mild increment of just 0.3% MoM recorded in October. Market activity slackened after the traditional peak rental season from July to September and approaching the end of the year.

We still see resilience on the luxury front, particularly in Southern District. A 4,759-sq-ft house in Shouson Hill in Island South was leased for HK$600,000 per month (or HK$126 per sq ft), and a 4,190-sq-ft house in Residence Bel-Air Phase 5, Pokfulam, was leased for HK$308,000 per month (or HK$74 per sq ft).