At the middle of the 2024, Eddie Kwok, Executive Director, Valuation & Advisory Services, CBRE Hong Kong shares some thoughts on Hong Kong’s residential market:

1. Lenders becoming more risk averse

• Reduction in lenders’ risk appetite, where banks tend to be more selective on borrowers and prioritize quality over quantity. We expect banks to further increase “risk premium” via increasing mortgage rate for selected inferior assets.

2. Active transaction volume in especially the primary market, but likely slowdown in H2 2024

Primary sales

• In H1 2024, a total of 9,419 primary units were sold by developers, equivalent to 87.6% of total primary sales in 2023. Majority of the transactions took place after the removal of property curbs, where developers managed to offload 8,049 units within 4 months (March till June 2024).
• Looking at the primary sales in recent months, buyers were mainly attracted by discounts and various incentives offered by developers.
• For the remainder of 2024, primary sales likely continue to capture market share from the secondary market. We estimate a total of 14,000 to 16,000 primary units to be sold in FY2024.

Secondary sales

• A total of 18,357 secondary units changed hands in H1 2024, increased by 48.0% H-o-H. Yet, the rebound was less than primary sales.

Total

• We foresee FY2024 to register around 45,000 to 48,000 transactions (primary plus secondary), around 5-10% increment.

3. Falling residential price, expecting residential price to dip by 5-10% in 2024

• For the first 5 months, residential prices dropped by 1.7%, according to data from RVD.
• CBRE expects residential prices to further decline in H2 2024. For FY2024, we foresee residential price may drop 5% to 10%.

4. Growing residential rents

• Overall rent went up by 1.6% during the first 5 months of 2024, according to data from RVD.
• Residential rental market is expected to resume an upward trajectory, with approximately mid-single digit growth in FY2024. Key demand drivers include
  • The influx of migrants under the Top Talent Pass Scheme
  • Growing non-local university students
  • Married couples and potential buyers that opt to rent for the time being.

5. Primary luxury residential

• According to CBRE’s record, in H1 2024, a total of 57 (53 in H1 2023) luxury residential properties (≥HK$100 million) were offloaded by developers. Developers cashed out a total of HK$14.3 billion (HK$13.3 billion in H1 2023) via these 56 luxury residential transactions.
• We anticipate that developers will continue to sell off their existing inventories. When there is/are reduction(s) in interest rates and banks resume financing support, this could provide a boost to the demand for luxury residential properties

6. Key trends in 2025 and beyond

• Buyers’ acknowledgement of possibility of negative carry over the holding period
• Rental cost or affordability may reach a tipping point
• Less attractive return in fixed deposit (as interest rate decline)

If the abovementioned scenario take place, residential price likely bottoms out.

For further information, please contact Eddie Kwok, Executive Director, Valuation & Advisory Services, CBRE Hong Kong as the details below.