Interest rate hike cycle dims mass residential market outlook

Residential transaction volume was down 39.4% YoY in 2022.

The interest rate hike cycle is expected to persist in early 2023 and will “cast a shadow” over Hong Kong’s mass residential market despite the reopening of the border with China, Colliers said.

In a report, the firm noted that the total residential transaction volumes fell to the lowest level since 1997, declining by 39.4% year-on-year to 45,050, excluding public housing, citing data from the Land Registry.

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Dorothy Chow, Executive Director, Valuation & Advisory Services at Colliers Asia, said that the revival of the economy, which is expected to boost residential prices including the stock market and restore investor confidence, “will hopefully bring the residential market back on track.”

“Whilst further interest rate hikes will continue to weigh on home prices, we foresee an overall 5-10% YoY downward adjustment in 2023,” Chow added.