Relaxation Impacts Volume Rather Than Pricing

• Anticipated stimulation of Mainland buyers and talents entering the local market with a projected volume increase of 40% - 50% in 2024 after the withdrawal of property cooling measures.

• Cancellation of BSD expected to attract Mainland HNWIs to the super luxury segment.
  
  
• Genuine cash-rich buyers interested in the super luxury market, but will only strike at the right price.

Withdrawal of Cooling Measures Boosted First-Hand Properties
The comprehensive withdrawal of property cooling measures, including the cancellation of BSD, NRSD, and SSD, has generated positive responses within the market. The first primary project launched after the stamp duty withdrawal, Belgravia Place, achieved remarkable success with a 100% sales rate in the first round, demonstrating the renewed optimism among buyers.

Developers Seize Opportunity Amidst Mass Market Oversupply
The withdrawal of cooling measures is anticipated to stimulate Mainland buyers and talents to expedite their purchases in the local market. Savills predicts a substantial increase in residential volume, projecting a 40%-50% rise to reach approximately 60,000 to 65,000 transactions in 2024. This surge in demand presents an attractive opportunity for developers to launch their primary projects amidst improved market sentiment.

One of the reasons behind developers’ eagerness to offload their primary holdings is that the mass market segment faces an oversupply issue, with approximately 109,000 units available over the next four years. It may take several years to absorb such supply, as the primary transaction volume hovered around 10,000 units per annum in 2022 and 2023.

Demand for Top-Notch Housing at the Right Prices
A recent sale of a prestigious house at 25-26A&B Lugard Road on the Peak for HK$838 million from a local family to a Mainland HNWI. Though far from a distress sale, the average prices of the 11,487-sq ft house (HK$71,700 per square feet) was still some 30% lower than the original asking price at the peak of the market.  This deal was a solid proof that there are still genuine, cash-rich Mainland / local buyers looking for top notch housing products, albeit only at the right prices.

Reviving Luxury Market Sentiment
Luxury transaction volume elsewhere remained thin with subdued sentiment in the last quarter of 2023, and luxury prices declined by around 1% to 2% in Q4/2023 as a result. The cancellation of BSD is expected to incentivize some Mainland HNWIs to reconsider investing in the local super luxury sector over the next few months, in particular for those who have already got adequate capital in Hong Kong. 

Forecasting a Return to Pre-COVID Levels
Forecast that the withdrawal of stamp duties will likely revert the volume to pre-COVID levels, reaching approximately 60,000 transactions annually. Residential prices are expected to stabilize, as most market fundamentals remain unchanged.

With more super luxury property owners potentially facing financial distress or having specific reasons to offload their holdings, high-demand super luxury houses, previously tightly held, may become accessible for purchase in 2024. Genuine cash-rich buyers are observing this niche market but are price-sensitive and will strike only when the right opportunity arises.

Mr. Jack Tong, Director, Research & Consultancy of Savills commented, “The comprehensive withdrawal of all property cooling measures should boost residential volume over the next few months, while prices may best flatten out.”

Ms. Cherrie Lai, Senior Director, Head of Residential Sales, Development & Investment, Prestige Home, Savills said, “Cancellation of BSD should encourage some Mainland HNWIs, in particular those who already got capital in Hong Kong, to enter the super luxury segment.”