Hong Kong homeowners face losses of nearly HK$10 million in second-hand market as price decline continues

In January, the secondary market saw 419 loss-making transactions, the highest since March 2023
A three-bedroom flat in Ho Man Tin recently sold for 38 per cent below what the seller paid in September 2018, a HK$9.62 million (US$1.2 million) loss

Hong Kong property

Peggy Sito

Published: 10:02am, 9 Feb 2024

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Homeowners in Hong Kong are grappling with substantial losses at the beginning of the year as the city’s property prices have experienced a decline for eight consecutive months.

The real estate market has been smothered under a softening economy and high interest rates. The recent stock market slump has further dampened market sentiment, leading flat owners who want to cash in to slash prices to secure sales, property agents say.

One example is Mantin Heights in Ho Man Tin, where a three-bedroom, 865 sq ft flat recently sold for HK$15.85 million (US$2 million), equivalent to HK$18,324 per square foot. This price represents a significant drop of 38 per cent, or HK$9.62 million, from what the seller paid in September 2018. Property agent Centaline Property Agency facilitated the transaction.

In January, the secondary market saw 419 loss-making transactions, the highest since March 2023 and equal to 27.77 per cent of total second-hand transactions recorded for the month.

A man works in a local property agency in Wan Chai on January 3, 2024. Photo: Sun Yeung

Additionally, 89 loss-making cases have been recorded so far this month, or 32.48 per cent of total secondary-market sales, according to Derek Chan, the head of research at property agent Ricacorp Properties.

“The Hang Seng Index once fell to below 15,000, and that hit market sentiment,” he said.

Home prices fell about 1.4 per cent in December, the eighth consecutive monthly decline, pulling the official index to a level last seen in January 2017, according to data compiled by the Rating and Valuation Department.

The decline in home prices has doubled the number of people in negative equity – where property value has slumped below their mortgage balance – to 25,163 cases valued at HK$131.3 billion at the end of December, compared with 11,123 cases worth HK$59.3 billion three months earlier.

However, Chan expects homeowners will be more reluctant to sell at big losses later this year as buyers gradually return to the market in anticipation of falling interest rates.

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The number of property transactions, including both residential and non-residential units, surged 17 per cent in January to 4,399 deals from a month ago, hitting a post-August high, according to official data from the government’s Land Registry. The statistics generally relate to transactions executed up to four weeks before their submission for registration.

In the secondary market, home sales increased 23 per cent month on month in January, with 2,161 deals recorded, according to Ricacorp Properties.

The surge comes amid the US Federal Reserve’s decision to hold interest rates steady on February 1, the fifth time since September, pushing back the timeline for rate cuts.