Hong Kong is poised for 2,800 new flats as developers await rate cuts to unleash inventory

Fed chairman Jerome Powell gave the strongest hint of a reduction in rates, which are at a 23-year high, during a speech on Friday, though he did not specify the timing. Observers widely believe that the easing will begin after the Fed meets on September 17 and 18.

Hong Kong’s monetary authority has moved interest rates in lockstep with the Fed to maintain the local currency’s peg to the US dollar, raising rates on 11 occasions between March 2022 and July 2023.

“It is believed that if the rate cut is officially implemented in September, it would eliminate uncertainties in the property market, leading to an acceleration in the sales of first-hand properties, thus stimulating the release of accumulated purchasing power and contributing to overall market transactions,” said Sammy Po Siu-ming, CEO of Midland Realty’s residential division.

New projects ready for launch include Cullinan Sky Phase 1 by Sun Hung Kai Properties (SHKP) and Twin Victoria by China Overseas Land, both in Kai Tak; SHKP’s Yoho Hub II and Lai Sun Development’s The Parkland in Yuen Long; SHKP’s Victoria Harbour II in North Point; CK Asset’s Blue Coast Phase 3C in Wong Chuk Hang; and Henderson Land’s Parkwood in Tai Po.

SHKP “always follows its own schedule for project launch”, a spokeswoman for Hong Kong’s most valuable developer said. “As planned, Victoria Harbour II has already issued the sales arrangement for tender and Cullinan Sky is planned to launch [this quarter]. The imminent interest rate cut will definitely give [an] impetus to homebuyers and investors, thus bringing a positive effect to the property market.”

As of August 23, 11,245 new home deals had been registered with the Land Registry in 2024, which exceeds the 10,595 transactions in the whole of 2023, according to Centaline.

Overall property deals in August – covering new homes, lived-in homes, car parks, shops, office spaces and industrial properties – were likely to fall below 5,000, the lowest since February’s 3,189 transactions, said Yeung Ming-yee, senior associate director at Centaline. In July, 5,262 properties changed hands, according to the Land Registry records.

As of July, Hong Kong developers had 22,300 unsold residential units, about 1.7 per cent higher than the 21,900 units they had at the end of 2023, Po said.

On Saturday, Wang on Properties sold more than two-thirds of the 60 units it offered at its Finnie project in Quarry Bay. The flats were priced between HK$4.29 million (US$550,000) and HK$8.54 million, or HK$17,502 to HK$23,470 per square foot – about 30 per cent lower than the initial launch of a nearby project, Henderson Land’s The Holborn, in 2021.

In June, an index measuring lived-in home prices in Hong Kong fell to 301.8, its lowest in nearly eight years since a reading of 296.2 in September 2016, according to the Rating and Valuation Department.