Rate cuts boost market activity and ease home price decline

• Residential sales activity continued to improve with November home sales volume reaching 6,298 units, the highest level since the lifting of cooling measures. Mass residential capital values dropped by 1.5% q-o-q in Q4 2024.
• Sentiment in the primary market improved in Q4 2024, driven by the competitive pricing of new project launches. Cullinan Sky in Kai Tak sold 95% of its units in the first phase, with 895 units being snapped up across four launches in a single day.

A residential site in Shatin sells in Q4 2024

• In Q3 2024, six luxury residential units were completed. These included two units at 16 Bowen Road and one unit at 28 Po Shan Road in the Mid-Levels. A total of 479 luxury residential units are expected to be completed in full-year 2024.
• In October, a residential development site, STTL 625 in Shatin, was awarded to Chinachem for HKD 1.02 billion at an AV of HKD 3,357 per sq ft, which represents a 15.1% discount compared to a nearby site sold in July 2024.

Rents slip as the leasing market experiences seasonal slowdown

• Luxury residential rents retreated by 0.5% q-o-q in Q4 2024, partly due to the high comparison base established in the previous quarter, along with the seasonal moderation in leasing demand. Leasing transaction volume in the luxury market fell by 45.0% q-o-q in Q4 2024.
• Investment activity in the high-end segment has remained strong. In October and November, the transaction volume for properties valued at or above HKD 50 million increased by 278.6% y-o-y. Meanwhile, luxury residential capital values dropped by 3.7% q-o-q in Q4 2024.

Outlook: Oversupply to continue to weigh on sales market through 2025

• In 2025, the housing market faces a primary challenge of oversupply, compounded by risks from the escalating US-China trade war and an uncertain interest rate outlook. We expect mass and luxury residential capital values to drop by about 5% in 2025.
• Luxury residential rents are expected to continue to rise and reach record levels as the influx of mainland Chinese families continues. We expect luxury residential rents to rise by 0-5% in 2025.