Hong Kong's real estate market has seen a significant increase in activity from mainland Chinese buyers, accounting for 24% of home sales in the first three quarters of 2024, with over 8,000 properties sold for approximately HKD 90.6 billion (about USD 11.66 billion). This rise follows government initiatives to attract foreign investment, including the elimination of additional stamp duties and reintroduction of luxury homes into the investment immigration scheme. Despite these positive trends, Hong Kong remains one of the world's least affordable housing markets, with ongoing price declines. Analysts speculate that stabilization may occur with expected interest rate cuts and continued government support.
Hong Kong's real estate market has experienced a notable rise in activity from mainland Chinese buyers in the first three quarters of this year. This increase comes in response to various government initiatives aimed at attracting foreign investment and easing restrictions on property purchases. According to data from Centaline Property Agency, purchases by mainland Chinese accounted for 24% of total home sales, with over 8,000 properties sold, valued at approximately HKD 90.6 billion (around USD 11.66 billion).
The spike in transactions is significant as it marks record highs for both volume and value. Compared to last year, the number of sales rose by 68%, while the value increased by 43%. To stimulate the struggling housing market, Hong Kong's government has implemented measures such as eliminating additional stamp duties on foreign buyers and lowering down-payment requirements for property purchases. This shift aims to make home buying more accessible, especially for expatriates and foreign professionals who seek to invest in Hong Kong's property market.
In addition to removing purchasing barriers, the city has reintroduced luxury homes into its investment immigration scheme-a move designed to attract high-net-worth individuals. Properties priced over HKD 50 million are now eligible for this scheme, potentially drawing in further investment from wealthy foreigners. These changes come as Hong Kong continues to grapple with the repercussions of the COVID-19 pandemic and a resulting population decline. Following extensive protests and the impact of the pandemic, many residents, including expatriates, left the city, leading to a shift in the demographic landscape.
The effect of these measures is evident, particularly in the secondary housing market, where the majority of mainland Chinese investments are taking place. The average price of these homes is around HKD 11 million, consistent with entry-level investments for first-time buyers in the city's competitive market. Despite these positive signs of revitalisation among foreign buyers, it is crucial to note that Hong Kong still ranks among the world's least affordable housing markets. Home prices, although significantly lower than their peak in 2021, have continued to decline, marking five consecutive months of price drops as of September.
Market analysts remain cautious but hopeful. There is speculation that the housing market may soon stabilise and rebound following anticipated interest rate cuts and continuous government support. However, the situation across the border in mainland China presents a contrasting reality. The Chinese real estate market is currently facing significant challenges, with new home prices experiencing their most substantial decline since May 2015, reflecting ongoing economic strains and policy adjustments.
Ultimately, Hong Kong's recent policy changes and the renewed interest from mainland Chinese buyers could signify a turning point for the city's real estate market. While challenges remain, particularly regarding affordability and the broader economic situation, the increased activity from foreign buyers suggests that confidence in Hong Kong's property market might be gradually returning. The outcomes of these policies will be closely watched in the coming months as market participants hope for recovery amidst a complex and shifting landscape.
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