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Hong Kong property deals plunge as exuberance over scrapping of curbs fades

Hong Kong property deals plunge as exuberance over scrapping of curbs fades
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Hong Kong property deals fall by a quarter as exuberance over scrapping of cooling measures fades

Hong Kong’s property sales fell by a quarter in May, the latest official data shows, as analysts said the initial exuberance over the lifting of property cooling measures had started to wear off.

Some 7,361 new and lived-in homes, car parks, shops, office and industrial units changed hands in May, down by 25.5 per cent from April, according to Land Registry data released on Tuesday. The total value of property sales plunged 25.8 per cent to HK$62.28 billion (US$7.9 billion).

From a year ago, both the number and value of property transactions were still higher by about 40 per cent.

Sales of residential units plummeted 35.1 per cent to 5,546 in May, but were up by 38.54 per cent from a year earlier.

The boost that stemmed from the scrapping of property curbs at the beginning of March appeared to be tapering off.

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In March and April, property deals rose on a monthly basis. In particular, the April sales – the highest since July 2021 when 9,957 units were sold – were roughly double the number in March, which marked the first full month of a restriction-free property market.

The prices of Hong Kong’s secondary homes have so far largely reflected the new-found optimism, increasing by an aggregate 2 per cent since February, official data shows.

“Overall trading has returned to a more rational state, but it is expected to remain better than the sluggish market conditions before the withdrawal of the cooling measures,” said Derek Chan, head of research at Ricacorp Properties.

“It is expected that the overall property transaction registration volume in June will only fall by about 3 per cent month on month, and will maintain the level of 7,000 units.”

With more than 7,000 new homes sold in the three months since the property restrictions were relaxed, it was natural for the market to “take a breath”, said Eddie Kwok, executive director, valuation and advisory services at CBRE Hong Kong.

In May, fewer units were launched compared to April, Kwok added.

“Developers mainly pushed their old inventory for sale during the month,” he said. “With several new projects in the pipeline awaiting launch, we expect developers to adjust their pricing strategy as buyers are mainly attracted by discounts and incentives.”

Kwok expects property deals to decline further in June.

For Habitat Property, which sells luxury lived-in homes, demand had picked up in recent weeks, said Victoria Allan, its managing director and founder.

“Most of the demand is coming from Hong Kong and mainland Chinese buyers,” she said. “I think this is because sellers are becoming more realistic and are willing to cut about 15 per cent from their original asking price.”

Although interest rates remain at a near 23-year high in Hong Kong, many potential buyers believe a rate cut is likely to come in the first half of 2025.

“The vendors are recognising that there is not likely to be a significant increase in prices because both the mainland China and Hong Kong economies are still sluggish,” said Allan.

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