Sale of residential units sluggish in the first half of 2023

Only over half of residential units were sold in H1 2023, slower than the five-year average.

Out of all the total projects accomplished in the January to June period, only 55% of the residential units were sold, according to JLL’s Residential Market Monitor. The slowdown in activity reflects the cautious approach of potential buyers. 

Especially when it is predicted that demand in the primary real estate market will continue to face challenges in the latter half of the year. 

Compared to the performance in the last five years, this was lower than the average sell-through rate of 78%.

“The new mass residential projects have to offer a bigger discount to lure buyers. "Coastline II" in Yau Tong is one of the examples where the prices are attractive to buyers, marking the start of a price war. We expect some developers will follow the price cuts later this year while the others may slow down project launches," said Norry Lee, Senior Director of Projects Strategy and Consultancy Department at JLL in Hong Kong.

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Mirroring the present sentiment among homebuyers, developers will need to establish pragmatic and up-to-date pricing strategies, occasionally below the prevailing market rates, to achieve satisfactory sales momentum. 

Developers unable to adopt aggressive pricing tactics should prepare for sluggish market reactions and potential delays in project launches.

"Figures from the Rating and Valuation Department show that housing prices dropped in May and June. But the overall rental index climbed 3.2% in the first half of the year, indicating that some of the housing demand has shifted to the leasing market. We expect the rents will edge higher due to the influx of non-local students and talents into the city." Cathie Chung, Senior Director of Research at JLL in Hong Kong, said.