Hong Kong’s property market continues to struggle, as house prices dropped for the second consecutive month in January. According to official figures, private residential property prices decreased by 0.4 per cent in December, following a 0.9 per cent fall the previous month. This reflects ongoing challenges in one of the world’s most expensive property markets, with potential homebuyers looking for clearer signs of recovery amid a weakening economic outlook.
So far, in 2024, the total price decline has reached 7.2 per cent. Since their peak in 2021, Hong Kong property prices have dropped by nearly 30 per cent, largely due to rising mortgage rates, reduced demand from expatriates leaving the city, and a general economic slowdown. Despite government measures to curb the market slump, such as relaxing down payment ratios and lifting property purchase restrictions, demand remains sluggish.
To encourage activity, the Hong Kong government recently announced a reduction in stamp duty for smaller residential transactions. Properties priced between HKD 3 million and HKD 4 million will now face a maximum stamp duty of just HKD 100 ($13), down from as much as HKD 60,000. Brokers suggest this move could stimulate first-time homebuyers and potentially boost home purchases by 5 per cent to 10 per cent, reversing the market stagnation.
While some real estate agents forecast a modest 5 per cent price increase in 2025, driven by possible interest rate cuts and geopolitical tensions, the broader economic situation remains uncertain. The ongoing decline in housing prices is part of a larger pattern of financial pressure in Hong Kong, which has struggled since the pandemic.
Hong Kong's real estate woes are not isolated, as other major cities like New York and London are also experiencing market volatility. However, Hong Kong’s affordability issues make its property downturn particularly pronounced. The city's property market could eventually benefit first-time buyers, but the path forward depends on how the broader economy, including trade tensions and domestic job markets, evolves.
