20th February 2025 – (Hong Kong) As the anniversary of the government’s comprehensive withdrawal of property cooling measures approaches, the Hong Kong real estate market has experienced a staggering decline in total value, amounting to nearly HK$480 billion. Despite a surge in Mainland buyers, who spent over HK$120 billion in the market, the effects have been insufficient to support local property prices.
The fiscal budget announced on 28th February last year called for the immediate removal of all cooling measures, including the Special Stamp Duty (SSD), Buyer’s Stamp Duty (BSD), and New Residential Stamp Duty (NRSD). Chan Wing-kit, Vice Chairman of Centaline Property Agency, noted that while the atmosphere in the market showed slight improvement post-removal, transactions in the primary and secondary residential markets initially surged from an average of 2,873 deals per month in the first quarter to 5,387 in the second, marking an increase of nearly 90%.
However, this rebound was short-lived, with transaction volumes falling back to an average of 3,017 in the third quarter. A subsequent policy report in October introduced further measures to stimulate the market, including relaxed mortgage criteria and improved investment immigration policies, leading to a recovery to 4,554 transactions in the fourth quarter. Overall, private residential transactions recorded 45,773 deals, representing a year-on-year increase of 32.7%.
The influx of Mainland buyers, benefitting from the policy changes, accounted for a record 11,522 transactions, totalling HK$128.28 billion, reflecting increases of 104% and 80% year-on-year, respectively. This group constituted approximately 25.2% and 30.8% of overall transactions during the same period.
Despite this activity, property prices have struggled to maintain momentum. After an initial two-month increase of over 2%, prices have since fallen for five consecutive months. The Centa-City Leading Index now stands at 138.47 points, nearly 5% lower than the 145.37 points recorded before the policy changes, indicating that current prices remain below pre-relaxation levels. Compared to the historical peak of 191.43 points in 2021, property values have plummeted by nearly 28%.
Chan remarked that nearly one year after the policy adjustments, while transaction volumes have clearly risen, prices have not followed suit, suggesting that the measures taken have not been sufficient to stimulate a genuine recovery.
The average price of private residential units has dropped to HK$6.99 million, a significant decline from the peak total market value of over HK$12 trillion in September 2021, when average prices reached HK$9.82 million. By January 2025, the total market value had fallen below HK$9 trillion, decreasing by nearly HK$480 billion over the year.
Concerns about a potential resurgence of speculative activity following the policy withdrawal have not materialised; instead, the current economic climate has made it challenging for property prices to recover. The secondary market is particularly stagnant, with transaction volumes remaining below 2% for the past three years, culminating in a mere 1.8% last year.
Developers, wary of declining market conditions, have adopted aggressive pricing strategies, resulting in a vibrant new build market, which saw over 15,000 registrations post-policy relaxation—a 55% increase year-on-year, with developers cashing in over HK$195.2 billion.
Looking ahead, Chan anticipates that the upcoming fiscal budget will introduce measures to invigorate the economy and, by extension, the property market, potentially stabilising prices and benefiting all Hong Kong residents.
