New and secondhand home sales in Hong Kong soared in the first 10 days of March, as property buyers and investors took advantage of the cessation of residential property market tightening measures by the Hong Kong Special Administrative Region government.
Figures from Hong Kong real estate agent Midland Realty showed that new residential unit transactions in the city between March 1-10 skyrocketed 25 times to 1,660, compared to 64 deals during the same period of February.
Regarding the secondhand housing market, the March 4-10 period recorded 137 transactions for the city's 35 major housing estates, 18 percent higher than the previous week, marking the highest level in nearly two years.
Sammy Po, CEO of Midland Realty's residential home business, predicts that new and secondhand home transactions in Hong Kong in March will reach 3,500 and 5,000, respectively.
Eric Tso, chief vice-president of mReferral Mortgage Brokerage Services, said the removal of various stamp duties has driven the pace of housing sales among Hong Kong residents with mainland backgrounds and mainland customers entering the market.
"Among the mortgage application cases referred by us, the number of these two types of customers has increased significantly by 3.4-fold compared to the period before the scrapping of the cooling measures," Tso said.
He added that as the government's talent attraction program will encourage more high-end talent coming to Hong Kong for work and settling down, this will become an important driving force for the future growth of the Hong Kong property market.
The Hong Kong SAR government announced that no special stamp duty, buyer stamp duty or new residential stamp duty are payable for residential property transactions, effective from Feb 28 when the 2024-25 Budget was unveiled. Sellers and buyers of residential properties, however, are still required to pay ad valorem stamp duties at Scale 2 rates, from HK$100 ($12.8) up to 4.25 percent of the consideration.
Since 2010, the HKSAR has introduced a raft of property market tightening measures to cool down the sizzling housing market, with notable moves in November 2010, October 2012, February 2013 and November 2016.
According to figures compiled by Ricacorp Properties, during the weekend of March 9-10, there were 21 transactions recorded in Hong Kong's top 10 benchmark housing estates, compared to 31 the previous weekend.
"After the abolition of the tightening measures, some homeowners are optimistic about the market outlook, so they are deciding to increase prices, which contrasts with buyers' desire for bargains. As buyers and sellers are engaged in back-and-forth negotiations, this has slowed the pace of transactions," said Ricacorp Properties CEO Willy Liu.
Joseph Tsang, chairman of Jones Lang LaSalle in Hong Kong, expects that after the scrapping of tightening measures, home sales will increase significantly by 10 percent to 15 percent in 2024, but home prices will fall 10 percent this year due to high interest rates and a weak economy.
"Abolishing the extra stamp duties for investors and overseas buyers could breathe new life into Hong Kong housing sales, including at leading developers Sun Hung Kai Properties, CK Asset and Henderson Land, which plan to bring new residential projects to market in March," said Patrick Wong, senior real estate analyst at Bloomberg Intelligence.
According to government figures, the average residential property transaction number was 3,584 per month in 2023, representing an annual decline of 4.5 percent.
Land Registry data showed that the number of agreements for sale and purchase of residential building units was 2,375 in February — before the announcement of the end of cooling measures — about 32 percent lower than January.
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