Hong Kong’s once-hot luxury residential market has been cooling off this summer as owners looking to unload their properties take haircuts on their properties.
A 3,792-square-foot house in Pok Fu Lam recently sold for HK$138 million ($17.6 million), more than 20 percent below the HK$175 million its previous owner paid in 2018, the South China Morning Post reported.
The deal is one of several recent luxury-home sales that have crystallized losses for owners despite a broader recovery in Hong Kong’s residential market. A nearly 4,000-square-foot home at The Morgan on Conduit Road sold for HK$190 million ($24.4 million), 45 percent below the HK$344 million ($43.9 million) paid in 2018. Earlier this summer, an 8,855-square-foot duplex at Mount Nicholson traded for about HK$550 million ($70.2 million), down 7.3 percent from its 2017 purchase price of HK$593 million ($75.7 million).
The losses come even as activity in the city’s high-end residential market has picked up. Bungalow transactions rose 8.6 percent in the first half of this year from the prior six months, while their combined value increased 4.4 percent to HK$17.2 billion ($2.2 billion), the highest first-half total since 2021, according to Centaline Property data cited by the South China Morning Post.
Glen Ho, Deloitte’s national turnaround and restructuring leader, told the Morning Post that the number of prominent bank-owned luxury homes selling at a loss appears to have declined this year as more buyers returned to residential property, easing pressure on lenders to dispose of assets quickly.
The split-screen market highlights the difference between liquidity and pricing power. Trophy properties in sought-after developments can still fetch nine figures, but owners facing financing pressure or other constraints may have little choice but to swallow losses. External headwinds, including China’s tax changes and tighter capital controls, have also slowed luxury activity in the second half of the year so far.
In mainland China, home values have fallen even further. The ongoing residential real estate slump has caused more than two decades of price growth to practically disappear, with housing prices consecutively falling each month for three years, according to data from the Bank of International Settlements.
— Chris Malone Méndez
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