News release

New policy brings uneven recovery in Greater Bay Area's housing market

Overall housing prices continue to face downward pressure in 2024

December 11, 2023

Yvonne Liu

Public Relations Director, Hong Kong and Macao
+852 2846 5264

HONG KONG, 11 December, 2023 – The 11 cities in the Greater Bay Area (GBA) witnessed uneven recovery in the housing market after the relaxation of cooling measures earlier this year, according to JLL's 2023 Greater Bay Area Residential Guide released today. The mainland cities in the GBA saw a mild and uneven recovery in housing markets, while Hong Kong's residential market remains subdued. Home sales in Macau rebounded, but the prices continue to fall. Such reflects that the recovery in the housing market remained slow and housing prices in the GBA are expected to remain under downward pressure in 2024.

After mainland China eased mortgage restrictions and lowered housing mortgage rates in September, the mainland cities in the GBA released specific details regarding the relaxation. Certain districts in Guangzhou have relaxed restrictions on second home purchases, while Dongguan and Foshan have removed home purchase restrictions on residents of Hong Kong and Macau. Meanwhile, a series of measures have been implemented to revive housing demand, and developers actively launched new projects during the traditional peak season for home sales, known as the "Golden September, Silver October" period. Such boosted the new home sales in Guangzhou, Foshan and Dongguan by 60%, 19% and 219% m-o-m, respectively. The remaining mainland cities in the GBA also experienced a delayed increase in home sales in October.

The transaction cost for buying a second-hand residential home in the GBA's mainland cities has dropped, thanks to the relaxation on housing measures. Thus, increasing transactions of upgrading demand in the secondary market was observed. The beneficial impact on the mass residential market is more obvious than in the luxury market. The sales of second-hand residential homes in Guangzhou, Shenzhen, Foshan and Dongguan increased by 57%, 16%, 5% and 4% m-o-m, respectively, in October.

Demand focuses on high-quality projects

"Due to increasing buyer concern about the resiliency of the assets, they shifted their focus to the actual value of property assets, which is the reason the home sales were mainly generated from the value-for-money projects," said Silvia Zeng, Head of Research at JLL in South China.

She noted that it led to two major changes. Projects that primarily promote future development concepts have become less attractive to buyers. As at the end of October, the average price of new flats in Zhongshan's Nanlang Town (including Ma'an Island) had dropped 10% within two months.

Another change is that the housing demand in second and third-tier cities continued to shift to core areas. For example, Chancheng, Nanhai and Shunde accounted for 75% of the total new home sales in Foshan in October, while in Dongguan, about 80% of the total new home sales in October came from the Central City area, the Binhai area and Songshan Lake area.

Hong Kong people moving north to buy property picks up

She added: "Overall, the property market in the mainland cities in the GBA has shown a partial slight recovery trend, but is still facing downward pressure. However, it is worth noting that factors such as customs clearance, easing of purchase restrictions, falling mainland property prices and exchange rate changes have led to more Hong Kong people buying property in the GBA cities, with Shenzhen, Guangzhou and Zhongshan being popular choices. The proportion of these buyers buying homes for their own use has increased compared to pre-pandemic levels. Economical sea-view properties suitable for retirement holidays in Huizhou, Zhongshan and other places are favoured. In addition to properties near the Shenzhen port, which are highly sought after by Hong Kong buyers as the railway transport network becomes more convenient, northern areas such as Longhua and Longgang, where property prices are lower, are also beginning to attract attention."

Prices of mass residential in Macau under downward pressure

The property market in Macau has been affected by high mortgage interest rates and a significant increase in public housing, leading to a low transaction volume, which has remained similar to last year with a y-o-y decrease of approximately 50.6%, indicating a sluggish market performance. The total transaction volume is expected to see a mild increase compared to 2022, driven by price cut on new projects.

Oliver Tong, General Manager of JLL Macau indicated that "Macau implemented adjustments to the property market in November, including stamp duty exemptions and relaxed mortgage loan-to-value ratios for luxury homes, which will help improve the sentiment in the luxury property market. However, starting next year, buyers purchasing residential properties below MOP 8 million will need to undergo the loan affordability stress test set by the Monetary Authority of Macau, with borrowers able to obtain a mortgage loan that covers up to 70% of the property value, which is lower than the existing 90% or 80% mortgage loan options. Some developers are proactively reducing prices ahead of the new policy to boost sales, leading to a decrease in prices in the secondary market, accompanied by an increase in volume. We believe that housing prices will continue to be under pressure next year."

Hong Kong home prices and transactions decline in tandem

Impacted by high interest rates, the Hong Kong residential market has experienced a simultaneous decline in both prices and transaction volumes after a brief recovery earlier in the year. In October, residential transaction volumes decreased by 25.8% m-o-m, while capital prices for small to medium-sized residential properties fell by 1.7% m-o-m.

Cathie Chung, Senior Director of Research at JLL in Hong Kong, pointed out, "Although the government relaxed the stamp duty restrictions in the October’s Policy Address, it still failed to inject momentum into the property market. First-hand market trading did not show any signs of improvement. Within two weeks following the Policy Address, the first-day sales rate for major new developments was only 24.6%, compared to 73.9% for major new developments launched in the third quarter."

Looking ahead to the property market trends in the coming year, Zeng said, "The mainland China has sufficient policy flexibility to gradually unleash the purchasing power in hotspot markets, which in turn can drive an overall improvement in market sentiment. Amid changing supply and demand dynamics, however, the property market will recover at a slower pace, especially the high-end segment which is likely to lag behind the mass market. Notably, the capital prices of high-end second-hand residential homes in Guangzhou have been under downward pressure recently. However, the housing policy is expected to provide a boost to the market confidence as it comes into play, leading to stabilised capital prices in the high-end second-hand residential market in 2024. Although the capital prices of high-end second-hand residential homes in Shenzhen are expected to sustain a downward trend in the coming quarters, property prices are likely to stabilise by the middle to end of next year. Performance within the high-end market will also continue to diverge, with projects valued at over RMB30 million demonstrating relatively stronger resilience against price declines."

Chung expects Hong Kong's luxury residential property prices to face further downward pressure due to high interest rates and the sale of distressed assets. However, the rental market is set to benefit from an increase in local leasing demand and the influx of non-local talent. Consequently, the market conditions and rental performance are likely to improve.


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