Hong Kong must act before ‘deep correction’ in property market, Midland analyst says after 2023 forecast points to record lows for new, secondary markets

Easing of the cooling measures will lead to more transactions, but home prices will not see a sharp increase, Midland’s Buggle Lau says

The total number of deals for new homes and second-hand houses will sink to second-lowest in decade and lowest since records began in 1996, respectively, Centaline says

Reading Time:3 minutes

Lion Rock in Hong Kong. Anticipation that the city’s cooling measures will be eased has grown after Financial Secretary Paul Chan last week said the conditions that prompted their introduction no longer existed. Photo: Dickson Lee

Published: 5:16pm, 2 Oct 2023

Hong Kong should move to restore confidence in its property market before it enters a “deep correction”, an analyst said after a lacklustre forecast was made for 2023.

Hong Kong recorded 8,792 new home sales in the first nine months of the year, and is expected to see about 11,000 deals for the whole year, a number that will not only be the second-lowest in nearly a decade but also just slightly higher than last year’s tally, Centaline Property Agency said on Sunday. The city saw 10,261 deals last year, the agency said.

Anticipation of the easing of Hong Kong’s cooling measures has grown since the government gave its strongest hint yet on Wednesday, with Financial Secretary Paul Chan Mo-po saying that the conditions that prompted the authorities to impose these measures starting in 2009 no longer prevailed.

The Midland Confidence Index, which reflects the confidence of property owners putting their homes up for sale, rose 1 per cent week on week on Monday, a slight recovery after two consecutive weeks of declines. The gauge, however, was still at its third lowest weekly level since mid-December last year, according to Midland Realty.

“Under the current economic situation, even if the government cuts all three cooling measures, it will not cause the property market to soar,” said Buggle Lau Ka-fai, Midland’s chief strategist.

Easing of the cooling measures will lead to more transactions, but home prices will not see a sharp increase, he added.