Hong Kong’s July home sales fall for the third month as supply glut defies discount war

Hong Kong’s home sales fell for the third consecutive month in July, declining by 3.5 per cent from the previous month, as discounts offered by developers failed to attract buyers from the sidelines amid a supply glut.

A total of 3,723 newly built and lived-in homes were transacted in the private market in July, a decline of 3.5 per cent from the 3,856 units sold in June, according to data provided by the Land Registry. The transaction value rose 3.4 per cent to HK$35.67 billion (US$4.56 billion) after the launch of pricier projects such as the Azure Forest flats in Kai Tak, the data showed.

Still, the number of homes sold jumped 21 per cent compared with last year when the city had just emerged from the pandemic, while the sales value surged by 34.2 per cent, the data showed. Total real estate sales, including offices, retail shops, car parks and industrial space, improved by 0.3 per cent, with their combined value rising by 3.8 per cent to about HK$42.67 billion.

Property sales jumped in March and April after the government scrapped some decade-old tariffs, in the form of a Buyer’s Stamp Duty aimed at non-permanent residents and a New Residential Stamp Duty for second-time purchasers. Owners were also spared a special stamp duty if they were to flip their property within two years.

The Hong Kong Monetary Authority followed with its own easing measures. Homes valued at less than HK$30 million are now eligible for 70 per cent mortgage financing, compared with the previous cap of 60 per cent for flats valued between HK$15 million and HK$30 million.

The exuberance was short-lived, as sales fell 25.5 per cent in May from the previous month. Then June’s transactions plunged by 30.5 per cent.

The easing measures are no match for interest rates that are hovering at their highest level in 23 years, quelling demand for homes and property investment.

“Transaction volume has stabilised, with slowing declines in recent months, driven by developers who continue to push their units at substantial discounts,” said Eddie Kwok, CBRE’s executive director of valuation and advisory service. “With primary sales gaining market share from secondary sales, this affects the transaction volume in the [second-hand] market.”

“The total transactions for the whole of 2024 may be around 45,000 to 48,000 units, representing a 5 per cent to 10 per cent increase” from last year, he added.