Decline in home prices accompanies reduced transaction volume

• Market activity in the residential sales sector continues to deteriorate, with September home sales volume reaching its lowest level since the lifting of cooling measures. The mass residential capital values dropped by 4.1% q-o-q in Q3 2024.
• Despite developers’ efforts to lower prices, the sell-through rate remained unsatisfactory. KT Marina 1 offered additional price discounts of up to 21%, resulting in the sale of only 18 out of 50 units on the first day of its project launch in September.

Residential site in Tai Wai scheduled for tender in Q4 2024

• The luxury residential segment saw the completion of seven units in Q2 2024, including five at 1 South Bay Close in Repulse Bay and two at THE KNIGHTSBRIDGE in Kai Tak. A total of 623 luxury residential units are expected to be completed in 2024.
• In Q4 2024, the government will put up one residential site for tender, namely STTL 651 in Tai Wai, which is expected to provide 360 units. Considering all sources, the total private housing land supply in Q4 would support the development of around 2,200 units.

Robust leasing market contrasts with sluggish sales market

• During the peak season, leasing volumes of luxury units surged by 48.6% q-o-q in Q3 2024. The heightened demand and limited availability have created a highly competitive environment for prospective renters. Luxury residential rents rose by 1.4% q-o-q in Q3 2024.
• Investment activity in the high-end segment has slowed down. Transaction volume for properties priced at HKD 50 million or above dropped by 36.9% in July and August compared to the preceding two months.

Outlook: Cautious near-term outlook persists despite recent rate cut

• Despite the rate cut, we remain bearish on the secondary market for the rest of the year, as homebuying sentiment is expected to take longer to recover, with pent-up demand largely absorbed and structural challenges still in place.
• Meanwhile, luxury residential rents are expected to continue their upward trajectory and reach record levels due to a shortage of available units and a recovering investment environment in the city.