Updated March 26th, 2024 at 11:32 IST

Hong Kong home prices extend 10-month decline, down 1.7% in February

Hong Kong's removal of stamp duties led to a surge in property transactions, boosting the depressed market.

Reported by: Business Desk
Home prices experienced a 1.7% decline in February | Image:Freepik
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Hong Kong housing: Hong Kong witnessed its private home prices dipping for the tenth consecutive month, reaching levels last seen in September 2016. Despite the government's recent removal of property market restrictions that had been in place for a decade, the downward trend in home prices persisted.

According to official data released on Tuesday, home prices experienced a 1.7 per cent decline in February compared to the previous month, following a revised 1.2 per cent drop in January.

Stamp duty removal boost

The government's move in late February to eliminate additional stamp duties for foreign and second home buyers, as well as for those selling properties within two years of purchase, aimed to stimulate the sluggish real estate market. This decision was met with enthusiasm by the property market, as evidenced by a surge in transactions.

Property developers and agents noted a substantial influx of mainland Chinese buyers into Hong Kong's property market, constituting up to a third of new property sales. This resurgence in demand follows a period of dormancy lasting over three years, largely caused by the pandemic.

High-end demand

Luxury residential properties valued at over HK$30 million ($3.84 million) saw an even greater proportion of mainland Chinese buyers, accounting for approximately 70 per cent of primary sales, according to JLL. The real estate firm anticipates continued activity from mainland Chinese buyers.

Driven by factors such as increased mortgage rates, talent outflow, and a bleak market outlook, housing prices have plummeted by more than 20 per cent from their peak in 2021.

Although there has been a rise in sales activity, analysts predict that prices will remain subdued as developers offer discounts to clear inventory. S&P Global Ratings forecasts only a moderate recovery in transaction volumes this year compared to 2023, as high interest rates persist.

(With Reuters Inputs)

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Published March 26th, 2024 at 11:32 IST