The removal of buying curbs in Hong Kong has led to a record influx of mainland Chinese buyers. In the first half of the year, they purchased 6,117 homes worth 70.5 billion Hong Kong Dollars, a 70% increase in transactions and a 42% rise in value compared to last year. This rise is attributed to the removal of extra stamp duties, high-interest rates peaking, and falling home prices. Despite this, local demand is cooling, with private home prices dropping slightly. Hong Kong continues to be the world's least affordable city, reflecting persistent challenges despite the boost from foreign investments.
Hong Kong's property market has seen a rise in purchases by mainland Chinese buyers in the first half of this year. This increase came after Hong Kong removed additional stamp duties for foreign and second home buyers in late February. These changes were made following a 20% drop in property prices from their 2021 peak due to higher mortgage rates, a talent outflow, and a weak market outlook.
In the first six months, mainland Chinese buyers bought 6,117 new and second-hand homes worth a total of 70.5 billion Hong Kong Dollars (USD 9.03 billion). This marks a 70% increase in the number of transactions and a 42% rise in value compared to the same period last year. These purchases accounted for 25% of the total volume and 31% of the total value of transactions in Hong Kong's property market during this time. These figures are the highest on record, with mainland Chinese buyers previously contributing less than 15% before 2023.
Several factors have driven this increase in purchases. The removal of extra stamp duties, a peak in interest rates, and falling home prices have made Hong Kong's property market more attractive to non-local buyers. Mainland Chinese investors and those with Hong Kong citizenship are particularly interested. According to Centaline Asia Pacific vice chairman Louis Chan, these buyers often prefer new and small-to-medium-sized homes.
The property market in mainland China is currently struggling, which may also be pushing buyers to Hong Kong. New home prices in mainland China have been dropping at their fastest rate in nine years as of June, and property sales and investment continue to decline. This ongoing slump has likely led investors to seek more stable and potentially profitable opportunities elsewhere, with Hong Kong being a prime destination due to its proximity and favourable buying conditions.
Despite the rise in foreign buyers, Hong Kong's private home prices have shown signs of cooling. In May, prices dropped by 1.2% from April after two consecutive months of increases following the removal of purchase curbs. This decline suggests that much of the local pent-up home-buying demand has already been satisfied. Nevertheless, Hong Kong remains the least affordable city in the world, a title it has held for the fourteenth consecutive year according to a survey by Demographia.
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