Hong Kong home prices to fall by 5% this year

Meanwhile, mass residential rents are expected to rise by up to 8%.

Despite the government removing all property cooling measures at the end of February, Knight Frank said the recovery in home prices has remained slow. This is due to the high interest rate environment, insufficient buyer purchasing power, and the abundance of unsold inventory. 

“The total number of unsold residential units reached a record high in 2023, and new private home supply is expected to hit a 20-year high this year,” said Martin Wong, Knight Frank’s Senior Director and Head of Research & Consultancy, Greater China.

Here’s more from Knight Frank:

Considering the ample residential supply and interest rates yet to be lowered, we expect home prices to fall by 5% in 2024, while first-hand and second-hand transactions are projected to increase slightly to 48,000-53,000 units, with first-hand sales accounting for 35%.

In contrast, the leasing market remained robust, supported by demand from overseas top talents. We expect mass residential rents to rise by 5-8% and luxury rents to rise by 3-5% in 2024.

Due to market challenges, most residential sites will be rolled over from 2023. We estimate that the government land sale revenue in 2024 will reach HK$10 to 13 billion, while the annual land premiums are expected to reach HK$5 to 8 billion.

Given the unfavourable economic climate and lingering high interest rates, we expect the home prices to move repeatedly downwards in the second half of the year and appear as "obtuse-shaped" over 2024. Until the unsold inventory drops by another 8,000 to 10,000 units, there may not be a rebound in home prices.