‘Worst is over’ for Hong Kong property even though sales dropped to four-month low in February, analysts say

The total number of transactions, including those for residential, office, retail and car parking spaces, dropped 27.7 per cent to 3,182 deals from a month earlier, according to Land Registry data. The total value of sales also plummeted 31 per cent to HK$23.25 billion (US$2.98 billion).

Last month’s tally was a turnaround from January, when the number of transactions surged by 17 per cent month on month, hitting a post-August high as the US Federal Reserve held interest rates steady amid expectations of rate cuts later this year.

However, the benchmark Hang Seng Index dropped 9 per cent and the Hang Seng Tech Index slumped by 20 per cent in January due to concerns about weak consumption and the crisis in mainland China’s property sector.

“The stock market slumped substantially in January, which had a spillover effect, hurting the confidence in the property market,” said Yeung Ming-yee, senior associate director at Centaline Property Agency.

Yeung, though, is positive about the outlook for Hong Kong’s property sector after Financial Secretary Paul Chan Mo-po removed all property curbs in his budget speech on Wednesday. The same day, the Hong Kong Monetary Authority (HKMA) also relaxed its mortgage policies to allow homebuyers to borrow more for buying properties.

NWD to tap improved sentiment by bringing property launches forward

“It is expected that the number of property transactions will bounce back to the high levels seen in January last year,” she said. Hong Kong property sales in January last year reached 4,427 deals valued at HK$32.5 billion, a five-month high, as the city reopened its border after three years of Covid-19.

The February numbers also ended three straight months of increases. Between November and January, buyers’ confidence was lifted by stable funding costs and the government’s migration programme, which allows eligible persons to pursue residency in Hong Kong through capital investment in the form of financial assets.

Sun Hung Kai profit rises on valuation gain, eyes boost from interest rate cut

“We think the worst is over,” said Eric Tso Tak-ming, chief vice-president of mortgage broker mReferral. The removal of extra stamp duties and other property curbs will accelerate the pace of people entering the market through the Top Talent Pass Scheme, and will also attract more international institutions to reinvest in Hong Kong, he added.

“The relaxation of the HKMA’s mortgage policies will further stimulate the property market, and it is expected that mortgage transactions will gradually recover, with the number of mortgage applications expected to stabilise within the year,” Tso said.

Stock market investors are already betting on a rising property market, which is expected to benefit sales at property agencies. The share price of Midland Holding, the city’s largest agency, rose 37 per cent this week to close at HK$0.89 on Friday.

The new policies could boost secondary home sales to a 12-year high this year, given the low basis last year, said Patrick Wong, a Bloomberg Intelligence analyst.