Q1 Residential Transaction Volume Down by Half Y-O-Y, Market Expected to Recover Lost Ground in 2H


Keith Chan, Director, Head of Research, Hong Kong, Cushman and Wakefield commented: “Total residential sales and purchase agreements (S&Ps) in Q1 2022 are estimated to reach 9,187 deals, a fall of 49% y-o-y, and the lowest activity recorded since the onset of the pandemic in early 2020 (Chart 1). Given the continued tightening of social distancing measures, together with intensified geopolitical uncertainties, most buyers are adopting a wait and see attitude. With the aforementioned factors, coupled with developers’ likely intentions to delay project completion timelines, we expect transaction volumes will fall further from the 4,275 agreements recorded in January to around 2,000 in March.”Edgar Lai, Director, Valuation and Advisory, Hong Kong, Cushman & Wakefield shared: “The secondary market has been hit by the pandemic, with the overall price slipping by 2.2% from its peak in September 2021. Prices at City One Shatin, a proxy for the mass market, have decreased by 5.2% q-o-q (Chart 2). Similarly, prices at Taikoo Shing, a proxy of the middle market, dropped by 4.9% q-o-q (Chart 3). On the other hand, Residence Bel-Air, representing the luxury market, has shown greater resilience with a relatively milder fall of 4.1% q-o-q (Chart 4). Typically, luxury property owners have greater holding power and can contribute to relatively more stable prices.”

Commenting on the market outlook,
Keith Chan highlighted: “Control of the pandemic in the next three months will be crucial to the domestic property market. If the pandemic is brought under control before mid-year, and the social distancing measures and border controls are gradually relaxed, the Financial Secretary’s recently announced relaxation measures in the mortgage insurance program policy will likely help the market recover, and will stimulate demand that was previously excluded from the program. With the aforementioned assumptions, the property market is expected to recover in the second half of the year. We expect it will be driven by first-hand properties, with gradual momentum growing into the second-hand market. Given the high base in 2021, the total transaction volume in 2022 is expected to drop by 15% to 18%. Overall average home prices will likely reach the bottom by 1H and start to recover by 2H, and we hold growth expectations at between 0% and 3% for 2022.”

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Left: Keith Chan, Director, Head of Research, Hong Kong, Cushman and Wakefield

Right: Edgar Lai, Director, Valuation and Advisory, Hong Kong, Cushman & Wakefield

 

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