Hong Kong property market deal flow seen slowing further after transaction volumes fall to a five-month low in June
- The number of property transactions in Hong Kong struck a five month low of 4,777 in June, down 10 per cent from May, according to Land Registry data
- That trend is unlikely to reverse any time soon as Hong Kong Monetary Authority CEO Eddie Yue Wai-man warned that the cycle of rising interest rates was far from over
Property transaction volumes in Hong Kong fell to a five month low in June after declining by a tenth from a month ago, shaving nearly a quarter from the previous year’s levels as caution prevailed in one of the world’s priciest real estate markets, official data showed on Tuesday.
The number of properties changing hands, including residential, commercial and industrial units and parking spaces, struck a five-month low of 4,777 in June, down 9.6 per cent from May, according to data released by Hong Kong’s Land Registry on Tuesday. Transactions are down 24.1 per cent from June 2022 when 6,290 deals were struck and 44.4 per cent lower than the March level of 8,599, which was a 20-month high at that time.
Deal flow could shrivel for the fourth straight month hitting lows not seen since January, experts say.
“Although the United States and Hong Kong both suspended interest rate hikes in mid-June, the message is that there are still two chances of interest rate rises in the future, which made the markets cautious,” said Derek Chan, head of research at the real estate agency. “The overall transaction volume will remain under pressure this month.”
The corresponding value of the deals struck fell 11 per cent month on month to HK$39.67 billion (US$5.07 billion) in June. The decline in transaction value follows the slide in prices of lived-in homes in May, the first fall this year, as rising interest rates soured appetite.
That trend is unlikely to reverse any time soon- Hong Kong Monetary Authority CEO Eddie Yue Wai-man warned in June that the cycle of rising interest rates was far from over despite the de facto central bank hitting the pause button following 10 straight increases in its base rate since March 2022.
Bank of East Asia said it expects commercial lenders to raise their prime rates by 25 basis points in July after rising interbank lending rates, or Hibor, struck their highest levels since 2007 in June.
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Chan expects the number of transactions to continue to shrink in July, to about 4,610 property units, down 3.5 per cent on the month. Rival agency Midland Realty expects a sharper fall in July with overall property transactions declining to 4,500. These forecasts could make July the slowest month since January. Centaline Property Agency echoed the view that July’s figure could fall to the lowest since January’s level of around 4,427.
Still, Ricacorp expects deal flow to improve in August when it expects new property launches to pick up. Even though the market for new homes had the best sales performance among all categories in June, the number of deals edged up by only 3.5 per cent to 1,013 as the market watched the impact of interest rate rises.
Lived-in homes saw sales plummet 13 per cent to 2,411 in June, which was the weakest month of 2023. Non-residential properties saw a 5 per cent decline in sales to 735 in June from a month ago.
