Hong Kong housing market needs more rate cuts, wealth from stock gains to end slump

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Lower financing costs and greater wealth effect from stock gains are needed to overcome another year of declines in home prices, analysts say

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More policy support are needed to overturn a 6.2 per cent drop in home prices this year. Photo: May Tse

Cheryl Arcibal

Published: 10:00am, 9 Oct 2024

Hong Kong’s beleaguered residential property market will need more tonic from lower financing costs and greater wealth from stock market gains to overcome the losses in income and confidence, industry experts said.

Both are crucial ingredients to foster a sustained recovery in volume and prices through the end of the year, according to Rosanna Tang, executive director and head of research in Hong Kong at property consultancy Cushman & Wakefield.

Further policy easing by the Federal Reserve, as priced in by interest-rate traders, “could bring back buyers’ confidence,” she said. “We could potentially see some improvement of home prices this quarter if the stock market continues to perform well.”

Hong Kong’s live-in home prices fell by 6.2 per cent on average this year through August, according to the latest report published by the Rating and Valuation Department. That is deeper than the 5 per cent drop projected by Cushman for 2024.

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Based on recent evidence, the residential market might struggle like it did in the recent past. Confidence among businesses in the city has waned amid a contraction in manufacturing activity. Median household income grew by only 2.1 per cent in the January-to-July period, versus 5.3 per cent in the year-earlier period.