Home prices recovered 20-28% in Q1 since 2012

However, property investment volumes dropped 42% QoQ.

Hong Kong’s residential market rebounded amist China-US trade tensions with home sales expanding by an estimated 58% QoQ and by up to 20%-28% in price growth in Q1 2019 since 2012, Cushman & Wakefield revealed.

On the other hand, property investment market remained subdued as the transaction volume dropped 42% QoQ in Q1, as the curbs on capital flows in mainland China combined with local investors remaining on the sidelines led to the dwindled investment volume in the Hong Kong market.

According to Cushman & Wakefield, the number of agreements of sale and purchase (residential building units) recorded in the Land Registry in January 2019 stood at 4,543, which was 2.2 times the December 2018 figure of 2,060.

“Given home sales in February of 4,089 units and continuing momentum in March expected to lead to an estimated 5,500 S&Ps in the month, the total home sales volume in Q1 will reach an estimated 14,132, or up 58% QoQ,” the firm noted. “Furthermore, secondary sales accounted for more than half the total home sales in both January and February, a sign of improved confidence on the part of buyers.”

Also read: Real estate investment volumes jumped 16% to $399.8m in 2018: report

Additionally, sentiment in the property investment market remained weak, with the number of major deals, each with a consideration of over $100m, continued to dwindle 42% QoQ to 32 in Q1. For the quarter, a total consideration of $7.4b was observed, representing close to a drop of 77% QoQ.

Cushman & Wakefield also noted that there was a decline in almost all sectors in terms of both transaction volume and consideration, apart from one en-bloc office transaction in Q1 which had a bigger consideration than its counterpart in Q4 2018. Similar to last quarter though, most buyers' interests remained focused on the luxury residential sector.

Meanwhile, the report noted how home prices fell to a trough from mid-December 2018 to mid-January 2019 but have since picked up. As of March, the current prices of some popular estates have come up 20%, with some reaching close to 30%, from their trough levels.

“In other words, the past two months have witnessed the fastest recovery in home prices in these respective estates ever,” the authors commented, adding that the most significant growth was observed in City One Shatin, which recorded growth of 28% from the trough level. Taikoo Shing also recorded growth of 20% from the trough.