Delay of new launches will drive a more competitive residential primary market in the second half of 2022

HONG KONG, 7 March 2022 – The inactivity of new residential project launches in the first quarter of 2022 due to the fifth wave of the epidemic and the record-breaking number of applications for pre-sale consent are expected to lead to a high concentration of residential launches in the second half of 2022, according to JLL's Hong Kong Residential Sales Market Monitor released today.

Figures from Lands Department showed the volume of private residential units applying for pre-sale consent has remained high since 2021, averaging at 1,732 applications a month, the highest monthly average in recent years. Entering 2022, the number of applications surged to 7,094 in January, the highest ever recorded. As applications for pre-sale consent usually require approximately six months to a year to be issued, the high volume of applications today implies a potential corresponding increase in approvals six to twelve months from now.

JLL have estimated that potentially over 20,000 units will be issued with pre-sale consent this year, similar to the peak in 2018. (2018: 21,722 units; 2019: 14,137 units; 2020: 12,898 units; 2021: 14,659 units).

However, the launches of the new residential projects planned for the first quarter of 2022 are likely to be delayed, to the second quarter at the earliest, due to the fifth wave of the pandemic.

Norry Lee, Senior Director of Projects Strategy and Consultancy Department at JLL, said: "While the expected boom in new launches will provide more options for homebuyers, developers will likely adopt a more competitive pricing strategy. Subject to the economic conditions at that point, attractive pricing should theoretically contribute to the transaction volume and improve market sentiment post-fifth wave. Meanwhile, with activities focusing on the primary market, the secondary market volume will likely be compromised. Pricing will also stay sticky with volume hovering at low levels."

Nelson Wong, Head of Research at JLL in Greater China, said: "Notably, the Financial Secretary announced in the Budget Speech that the government would raise the cap of mortgage insurance programmes to HKD 12 million, which could provide some support to the residential market. It is also a welcome move as it smooths out the mortgage borrowing ladder and potentially allows buyers to seek larger sized units."