Hong Kong residential prices may fall up to 10% in 2024

The market already saw a 1.7% decline in the first five months of the year.

Residential property prices in Hong Kong are set to decline by 5% to 10% in FY2024, according to Eddie Kwok, executive director at CBRE Hong Kong.

The market has already seen a 1.7% decline in residential prices in the first five months of the year, based on data from RVD. The expert expects this trend to persist into the second half of the year.

Kwok also noted a reduction in lenders' risk appetite, emphasising a shift towards greater selectivity in borrower approvals and prioritisation of asset quality over quantity.

“We expect banks to further increase “risk premium” via increasing mortgage rate for selected inferior assets,” he noted.

In the first half of 2024, developers in Hong Kong sold 9,419 primary residential units, accounting for 87.6% of total 2023 primary sales. This surge followed the removal of property curbs, with 8,049 units sold between March and June 2024. Kwok attributes this activity to developer incentives and discounts. 

Looking ahead, he predicts continued primary market dominance over the secondary market, estimating 14,000 to 16,000 units to be sold by the fiscal year's end.

Meanwhile, secondary market transactions saw a 48.0% increase quarter-on-quarter, totalling 18,357 units in H1 2024, though lagging behind primary sales momentum.

Residential rents also rose by 1.6% in the first five months of 2024, driven by factors such as the Top Talent Pass Scheme, growing non-local university enrollments, and increased rental demand from married couples and prospective buyers. CBRE projects mid-single-digit rental growth for the fiscal year.

In the first half of 2024, developers sold 57 luxury residential properties valued at $100m or more, totaling $14.3b. 

“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,” said Kwow.

Looking ahead to 2025 and beyond, the expert highlights heightened buyer awareness of negative carry implications over holding periods, rental affordability challenges, and less attractive returns on fixed deposits amidst declining interest rates.