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The backstory: As we all know, the Hong Kong government loosened restrictions and reopened the border with mainland China after shifting its COVID policy stance. Since then, the city has even been actively hosting events like Art Basel, a business summit, a summit for family offices, attracting high-net-worth individuals and more, all of which have injected new hope for the local economy, which took a proper beating during COVID. Now, one sector that really needed that fresh dose of optimism was the property market.
More recently: Specifically, Hong Kong's property market took a massive hit last October, dropping to the lowest prices in five years, with interest rates rising and expats leaving. But guess what? The market is expected to make a comeback. This comes after the government reduced the tax rate for properties up to HK$9 million (US$1.1 million) in February, a move expected to benefit some 37,000 people.
The development: In March, property sales hit a 20-month high, with over 6,600 units sold, according to property consultancy CBRE. The market is especially hot for homes priced between HK$4 million (US$510,000) and HK$5 million (US$637,000), making up about 17% of total transactions in the first quarter of 2023. To top it off, the city’s about to see an influx of new housing projects, with Ricacorp Properties expecting 119 new private housing projects with 40,291 units to start this year.
“Besides improvement in overall investment sentiment, the government’s move on lowering ad valorem stamp duty rates also fuelled the surge in transaction volume,” said Eddie Kwok, senior director of valuation and advisory services at CBRE Hong Kong.
“More developers could offer discounts on their mass-market projects to boost sales due to ample new home supply in the pipeline,” said Patrick Wong, Bloomberg Intelligence analyst, last week.
“While there is pressure from the deteriorating fertility rate and the rapidly aging population, the collapse of immigration and the heated emigration wave have added fuel to the fire,” said the Natixis report when Hong Kong home prices for last October dropped to the lowest in nearly five years.