‘New Hongkongers’ from mainland China spurred city’s property market in the first quarter

Purchases of new homes by people from mainland China rose from about 9 per cent in the second quarter of 2020 to about 11 per cent in the first quarter of 2021, Land Registry data shows
In the luxury segment, they accounted for a third of all transactions, higher than 30.3 per cent in the first half of 2020

Hong Kong property

Lam Ka-sing

Published: 6:00am, 27 Apr 2021

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Hong Kong’s housing market is showing signs of recovery thanks to “new Hongkongers” from mainland China, analysts said.

These are residents who have recently acquired permanent residency in the city. Their property purchases are helping to offset a slowdown in home prices caused by increased emigration, which contributed to more supply and kept prices from rising fast. Both the primary and secondary housing markets have shown an upwards trend in the first quarter of this year.

“New Hongkongers have taken advantage of the opportunity – before the border [between mainland China and Hong Kong] reopens – to speed up their market entry. [Whether it is] the primary or secondary markets, the proportion of new Hongkongers entering the market has increased,” said Sammy Po, chief executive of Midland Realty’s residential division. “Many of the buyers [with Chinese pinyin names] are early immigrants to Hong Kong and new Hongkongers who already hold local permanent identity cards.”

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Buyers from the mainland have been responsible for 5 to 10 per cent of home purchases over the past few years. With the border being shut because of the Covid-19 pandemic, most of these buyers have been unable to come to Hong Kong to see properties or sign deals. Immigrants from mainland China who have recently qualified for permanent residency have seized upon this lull to snap up some bargains. The so-called new Hongkongers are boosting the city’s housing market, particularly for luxury homes, during an unprecedented recession in its economy, rising unemployment and increased emigration.

Data from the Land Registry shows that purchases of new homes by people from mainland China rose from a low of about 9 per cent in the second quarter of 2020 to about 11 per cent in the first quarter of this year, after rising for three consecutive quarters. This group’s purchases of lived-in homes have also risen for three consecutive quarters, from a low of about 5 per cent in the second quarter of 2020 to about 7 per cent in the first quarter this year.

A former senior Tencent executive, who bought a house on Peak Road for HK$598 million in late February, paid only 4.25 per cent of the amount as taxes, as a first-time local buyer with Hong Kong permanent residency. Photo: Winson Wong

In the luxury segment – homes worth more than HK$100 million (US$12.9 million) – they accounted for a third of all transactions in the first quarter. This was higher than 30.3 per cent in the first half of 2020 and 28 per cent in the first half of 2019.

“Luxury housing is popular among young wealthy individuals and new Hongkongers,” said Dave Ma, chief operating officer and director of Kowloon at Hong Kong Property Services (Agency). “Luxury housing prices have a better chance of outperforming the market.”

This trend comes as a total of 3,669 new homes were sold in the first quarter, an increase of 62.2 per cent over the same period last year. In the same three-month period, 14,923 lived-in homes changed hands, an increase of 74.8 per cent over the same period last year.

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According to the Rating and Valuation Department, the private residential property price index in February reported an increase of 0.9 per cent to 384.5, rising for two consecutive months and setting a new high in seven months, despite the record recession and rising unemployment.

Permanent residents do not have to pay an extra 30 per cent stamp duty levied on Hong Kong’s non-permanent residents. For example, Li Haixiang, a former senior executive vice-president of Tencent Holdings, bought a 7,388 sq ft house on Peak Road for HK$598 million in late February. As a first-time local buyer with Hong Kong permanent residency, he paid only 4.25 per cent of the amount as taxes.