Hong Kong's private residential housing market is showing signs of stabilization as inventory levels gradually adjust to align with demand. Comparing the available supply of private housing (comprising units approved for pre-sale and unsold units in completed projects) to primary transaction volumes over the past year, the months of supply dropped to 78.2 months in October 2024, down from a peak of 101.6 months. According to JLL's latest Residential Market Monitor report, new home inventory is expected to reach a more balanced supply-demand equilibrium by the end of 2025.
The Housing Bureau forecasts approximately 108,000 private residential units will become available in the next three to four years, marking only a 10% increase from the peak levels of 2021. When evaluating the balance of supply and demand through monthly housing supply metrics, the months of inventory rose sharply from 54.4 months in December 2021 to 95.4 months in 2022, peaking at 101.6 months in 2023. However, by September 2024, this figure had moderated to 78.2 months, reflecting improving market absorption rates.
Norry Lee, Senior Director of Projects Strategy and Consultancy at JLL Hong Kong said, "Assuming primary market transaction volumes stabilize at 18,000 units annually--a modest increase of under 10% from projected 2024 levels--months of supply could further decline to 58.0 months by December 2025. This would approach the more balanced levels observed in 2021."
Despite elevated inventory levels in completed and under-construction projects, forward-looking supply indicators paint a different picture. The number of potential units from disposed sites ready for immediate construction dropped to 10,000 in September 2024, the lowest since 2012, representing a steep decline from 25,000 units in March 2023. This structural reduction in the supply pipeline could moderate medium-term inventory growth, easing pricing pressures on new projects.
Developers are actively managing their pipelines to moderate effective housing supply. Strategies include adjusting construction timelines, repurposing projects, and optimizing launch schedules. For instance, SHKP delayed its So Kwun Wat project citing design changes, while seven residential developments in 2024 allocated unsold units for leasing to manage the disposal pipeline. Such strategic interventions could lead to a faster convergence toward healthier inventory levels than aggregate statistics currently suggest.
Cathie Chung, Senior Director of Research at JLL Hong Kong also commented, "Key macroeconomic headwinds impacting Hong Kong's residential market are beginning to moderate. However, geopolitical uncertainties, such as potential escalations in the US-China trade war, remain a significant concern. While the path to recovery remains complex, improving fundamentals provide a foundation for potential market stabilization."
This evolving balance of supply and demand, combined with proactive supply management by developers, signals a gradual recovery in Hong Kong's residential housing market as it adapts to shifting conditions.
