Luxury apartment transactions fell by 24.8% in Q2

Residential demand may pull-back over the next three to six months.

Luxury apartment transactions in Hong Kong crashed 24.8% YoY to how many? over the first half of the year whilst secondary transaction volumes declined 29.1%, according to a report by Savills.

The report noted that many potential buyers looked for bargains in the secondary market but few landlords were prepared to entertain, resulting in the sharp decrease. Prices in the luxury segment held up and increased 3.6% in Q2 and 5.6% over the first half of the year.

Overall, the Hong Kong residential market recorded 21,685 transactions in the first four months of 2019, whilst the primary market share of total volume increased from 22.4% to 37.4% over the same period.

The super luxury segment saw weakness in demand as both Mainland and local high- net- worth individuals (HNWIs) reportedly adopted a wait-and-see attitude. This resulted in a 1.5% price adjustment in the townhouse market in Q2.

The report also noted that the recent trade woes faced by China may have pushed some of the HNWIs to at least rethink their asset allocation strategy. Coupled with a much more moderate GDP growth pace of 0.1% YoY in Q1, residential demand may pull back over the next three to six months, especially at the top end where asset allocation among cities is most mobile.

On the other hand, the Kowloon/NT luxury market rebounded in H1 due to aggressive primary launches. Transaction volumes rebounded 1.6% and 10.8% YoY, respectively, led by sales in Shatin/Tai Po, Tuen Muen, and Ho Man Tin. As a result, prices in the two markets rose 0.9% and 2.3% respectively in Q2.