Anticipating a Surge: Hong Kong Residential Sales Projections for 2024

As the Hong Kong property market undergoes significant shifts, developers brace themselves for a surge in residential sales volume projected for the year 2024.

In a recent report by Savills, it was revealed that the Hong Kong government’s decision to withdraw all property market cooling measures, including the cancellation of Buyer’s Stamp Duty (BSD), Non-residential Stamp Duty (NRSD), and Special Stamp Duty (SSD), has sparked optimism among industry players.

The initial response to these policy changes has been overwhelmingly positive. Notably, the launch of the first primary project post-stamp duty withdrawal, Belgravia Place, witnessed a remarkable sales performance. With a 100% sales rate recorded in the first round, equating to 138 units sold within a mere four hours, the market exhibited robust demand. Impressively, approximately 20% of buyers were identified as non-permanent residents, indicating a diverse investor base.

Savills predicts that the withdrawal of cooling measures will stimulate Mainland buyers and talents to expedite their property purchases in the local market. Consequently, residential sales volume is forecasted to rebound significantly, with an anticipated increase of 40% to 50%, reaching an estimated range of 60,000 to 65,000 units in 2024. Developers are expected to capitalize on this improved sentiment by accelerating the launch of their primary projects to meet heightened demand.

However, amidst this optimistic outlook, challenges persist in the mass market segment, characterized by an oversupply issue. With approximately 109,000 units projected to be available over the next four years, absorption of such supply may pose a prolonged challenge. Despite primary transactions hovering around 10,000 units per annum in 2022 and 2023, it may take several years to address this surplus.

In contrast, the super luxury segment witnessed notable activity, exemplified by the recent sale of a prestigious house at 25-26A&B Lugard Road on the Peak. Sold for HK$838 million from a local family to a Mainland High Net Worth Individual (HNWI), this transaction underscores the continued demand for top-tier housing products. While the transaction price represented a discount of approximately 30% from the original asking price, it signifies the enduring appeal of properties offering panoramic sea views, exclusive locations, and ample outdoor spaces.

Despite subdued sentiment in the luxury segment throughout the last quarter of 2023, the cancellation of BSD is anticipated to reignite interest among Mainland HNWIs, particularly those with existing capital in Hong Kong. Consequently, a resurgence in luxury transactions is expected in the coming months, bolstering market activity and potentially stabilizing prices.

In summary, the Hong Kong property market is poised for a dynamic year ahead, characterized by renewed investor confidence, increased transaction volumes, and shifting dynamics across different market segments. As stakeholders navigate these changes, strategic positioning and adaptation to evolving market conditions will be paramount for success in the year 2024.