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Hong Kong property: Mainland Chinese buyers snapping up 8 out of 10 new homes in some sales, agents say

“The entry of mainland buyers into Hong Kong property market effectively offsets the purchasing power loss caused by population outflow and emigration waves in recent years, providing stability to Hong Kong’s declining property prices,” Po said.

In recent project launches, mainland buyers contributed about 30 per cent of sales, higher than the 17 per cent they contributed in the fourth quarter of 2023 before the curbs were axed, Po said.

A view of residential buildings in West Kowloon, taken from the Sky 100 observatory. Photo: Sam Tsang

Raymond Cheng, managing director and head of China and Hong property at CGS International, said the proportion is even higher in some recent launches: 60 to 80 per cent.

“It’s not surprising that we see a high number of mainland buyers coming to the market,” he said. “Before the government scrapped everything property cooling measures, mainland buyers, who would have wanted to buy a HK$10 million (US$1.28 million) flat had to shell out HK$13 million because of a HK$3 million extra tax. Now with home prices dropping by 25 per cent, the same property will only cost HK$7.5 million. That’s a more than 40 per cent savings.”

Mainland buyers accounted for 20 per cent to 30 per cent of the total buyers of new homes before the measures were scrapped, Cheng said. Now, recent launches in districts that are close to prestigious primary and secondary schools, such as Wong Chuk Hang and Tseung Kwan O, are proving particularly popular with mainland Chinese buyers.

Government statistics also show that overall transactions have increased significantly in the two months since the restrictions were lifted. In March, property transactions hit a 10-month high with 5,013 units changing hands, according to official data. In April, property sales further surged to 9,880 unitsthe most since July 2021. The figures include homes, car parks, shops, industrial properties and offices.

Meanwhile, prices of second-hand homes in the city rose by 1.06 per cent in March, the first gain in 11 months, according to data from the Rating and Valuation Department.

Analysts credited the revitalized real estate sector to the scrapping of measures such as the New Residential Stamp duty, which allows the purchase of additional properties without paying extra stamp duty, as well as the Buyer’s Stamp Duty that was meant to levy non-permanent residents.

Apart from securing flats for their children, mainland buyers also see Hong Kong homes as a good investment, said Derek Chan, head of research at Ricacorp Properties, who estimates that mainland buyers account for between 30 per cent and 70 per cent of current homebuyers, depending on the project.

“Properties in Hong Kong are of good quality, well-managed and easy to rent out,” Chan said. “The rental yield is generally 3 per cent or above, which is significantly better than the yield of properties in mainland China. Therefore, mainland investors are very willing to buy properties in Hong Kong.”

With the government actively courting more professionals to come to Hong Kong, Chan said some mainland buyers are buying in bulk.

“We have been hearing about a number of mainland investors purchasing multiple units for investment purposes,” Chan said. “Therefore, it is believed that the proportion of investment by mainland buyers will still have the opportunity to gradually increase.”

CGS’ Cheng said that despite robust demand from mainland Chinese buyers, a housing glut is likely to keep home prices in check.

Hong Kong’s expected supply of new homes rose to a record high for a second consecutive quarter at the end of March. According to data released by the Housing Bureau late last month, the supply is now expected to reach 112,000 units in the next three to four years. The estimate represents a quarter-on-quarter increase of 3,000 units, or 2.7 per cent, from an expected supply of 109,000 units as of the end of December last year.