The residential property market in Hong Kong is facing challenges due to a volatile stock market, a difficult external economic environment, and a decline in new births and marriages. The market has not yet reached its lowest point, and a slow and challenging recovery is expected. Factors such as high interest rates, an excess of unsold new units, and a lack of purchasing power from mainland China contribute to the obstacles. Home prices have experienced a decline, with a 1.2% decrease in the second quarter and a significant drop of 15.9% since the peak 20 months ago.
In its recent midyear property market report, JLL shed light on several factors that are impacting housing demand and shaping the residential property market in Hong Kong. These factors include a volatile stock market, a challenging external economic environment, and a decline in new births and marriages. According to the report, although the residential property market in Hong Kong is struggling, it has not yet reached its lowest point. The path to recovery is expected to be arduous and time-consuming due to various obstacles, such as high interest rates, an excess of unsold new units, and a lack of purchasing power from mainland China.
Presently, the housing market in Hong Kong is experiencing the longest period of price adjustment since 2008. JLL's report indicates a 1.2% decline in home prices during the second quarter of 2023 compared to the previous quarter. This decrease follows a 4% increase in the first quarter. Furthermore, home prices have witnessed a significant decline of 15.9% since their peak 20 months ago. The company anticipates an additional drop in home prices ranging from 5 to 10 percent during the second half of the year, resulting in a total decline of 5 to 8 percent for the entirety of 2023.
Another noteworthy aspect highlighted in the report is the substantial number of unsold units in completed projects, which is currently at its highest level since 2007. Hong Kong currently has 83,000 housing units available, with 18,000 of them being in completed projects, while the rest are still under construction. The report predicts that approximately 25,000 more units will enter the market in 2023.
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