Hong Kong's housing market woes persist, amidst a chronic supply shortage. However, property demand is now showing some signs of improvement, as interest rates started to fall and property market cooling measures were lifted.

Table of Contents

• Housing Market Snapshot
• Historic Perspective
• Demand Highlights
• Supply Highlights
• Rental Market
• Mortgage Market
• Socio-Economic Context

Housing Market Snapshot

Hong Kong's residential property price index fell sharply by 12.52% in Q3 2024 from the same period last year, its eleventh consecutive quarter of year-on-year decline, according to data released by the Ratings and Valuation Department (RVD). It was one of the biggest year-on-year price falls in the past two decades. When adjusted for inflation, residential property prices were down by 14.38% over the same period.

Variations in price movements per property size and region:

• Apartments smaller than 40 sq. m: prices fell sharply by 12.97% y-o-y in Q3 2024, to an average of HK$130,919 (US$16,824) per square meter (sqm).
• 40-69.9 sq. m. apartments: prices were down by 9.43% y-o-y to HK$138,949 (US$17,856) per sqm in Q3 2024.
• 70-99.9 sq. m. apartments: prices dropped by a huge 14.32% y-o-y to HK$171,396 (US$22,025) per sqm.
• 100-159.9 sq. m. apartments: prices fell slightly by 1.27% y-o-y to HK$202,242 (US$25,989) per sqm in Q3 2024.
• Apartments with sizes bigger than 160 sq. m: prices fell by 6.1% y-o-y to HK$252,255 (US$32,416) per sqm in Q3 2024.

Hong Kong's house price annual change

Demand is now improving, buoyed by falling interest rates and the removal of housing market restrictions. In the first nine months of 2024, the total number of property transactions in Hong Kong rose by 7.4% y-o-y to 38,001 units, following annual declines of 4.5% in 2023 and 39.4% in 2022, based on figures released by RVD. Likewise, sales volume increased by 2% y-o-y to HK$ 327.26 billion (US$ 42.05 billion) over the same period, an improvement from annual contractions of 4.5% in 2023 and 44.4% in 2022.

Despite this, residential construction activity remains weak. Completions plummeted by 34.6% y-o-y to 13,852 in 2023, following strong growth of 47.1% in 2022, according to figures released by RVD. Then in the first nine months of 2024, there were 10,921 dwelling units completed in Hong Kong. About 56% of which are properties with an area of 40 sq. m. and below.

Hong Kong continues to suffer a chronic housing shortage - a problem that has dragged on for over two decades.

From 2008 to 2013, Hong Kong's dwelling prices skyrocketed by 134% (95.7% inflation-adjusted), driven by a flood of money in the wake of the global financial crisis.

The market slowed in the first half of 2014, but bounced back in the second half, with prices rising by 13.6% in Q4 2014, 19.6% in Q1 2015, 20.4% in Q2 2015, and 15% in Q3 2015.

After a brief housing market slowdown, house prices surged again by 41.5% (35.5% inflation-adjusted) from H2 2016 to H1 2018.

The housing market slowed from the end of 2018 until the first half of 2019 due to macro uncertainties and social unrest. After a short-lived recovery in the second half of 2019, the housing market struggled again in 2020 due to pandemic-related travel restrictions and lockdown measures imposed worldwide. Then in 2022, things got worse, with house prices plunging by 15% (-16.7 inflation-adjusted), following a modest increase of 3.7% in 2021 and a meager growth of 0.2% in 2020. In 2023, the market remained depressed, with house prices falling further by 7% (-9.2% inflation-adjusted).

HK's housing market will remain weak in the medium term, with house prices expected to fall further this year. CBRE, S&P Global, Morgan Stanley, Citigroup and UBS, among others, project house price falls between 5% and 10% for the whole year of 2024.

Hong Kong's service-oriented economy grew by a modest 3.2% in 2023 from a year earlier, in stark contrast to the contraction of 3.5% recorded in the prior year. To boost economic activity, the HK government unveiled a number of measures last year, including offering cash handouts to residents, cutting salaries tax, and attracting more workers and foreign investments.

In the third quarter of 2024, the HK economy recorded a real GDP growth rate of 1.8% over a year earlier, following annual increases of 3.3% in Q2 and 2.8% in Q1, according to government figures. It is now the seventh consecutive quarter of year-on-year growth. However, on a seasonally adjusted quarter-on-quarter basis, real GDP contracted by 1.1% in Q3 2024, after growing by 0.3% in Q2 and 2.5% in Q1.

Overall, the government forecasts the HK economy to grow by 2.5% this year.

Historic Perspective:

Hong Kong property market remains the world's most unaffordable, but bubble risks declined sharply

Hong Kong's housing boom in the past decades has been propelled by a combination of stringent government regulations on development, low interest rates, and currency stability; while the supply of land, which the government controls, continues to diminish.

Hong Kong's currency peg to the dollar kept borrowing costs near record lows, fuelling continued property demand.

Despite improved affordability because of the recent decline in house prices, Hong Kong's property market remains the world's most unaffordable for the twelfth year in a row, according to the Demographia International Housing Affordability Survey 2024. Average home prices were 16.7 times the gross annual median household income in 2023, down from 18.8 times in 2022 and 20.7 times two years ago. In fact, it is now the lowest level since 2016.

"Hong Kong is the least affordable market in Demographia International Housing Affordability, with a median multiple of 16.7, and the only market covered in China," said the Demographia report. "This is an improvement from the pre-pandemic 20.8 in 2019, the result of declining house prices and

improved incomes. Hong Kong has had the least affordable housing in each of the 13 years of coverage by Demographia."

Similarly, in Mercer's 2024 Cost of Living Survey, Hong Kong was ranked as the world's most expensive city for expatriates to live in, followed by Singapore, Zurich and Geneva.

However, according to the 2024 UBS Global Real Estate Bubble Index, Hong Kong is now down to the moderate bubble-risk territory because of the recent sharp house price declines.

"In the last four quarters, real housing prices in Hong Kong recorded a double-digit decline. In inflation-adjusted terms, house prices are back at levels last seen in 2012. The number of transactions fell sharply, and mortgage growth came to a standstill in the last four quarters," said the UBS report.

"High interest rates, anemic population growth, and a lack of buyer optimism all contributed to weak housing demand. However, residential rents and household incomes posted moderate gains in the previous year, contributing to lower imbalances. Bubble risk declined sharply in the last four quarters, and the city is now only in moderate bubble-risk territory," added UBS.

Demand Highlights:

Property sales increasing again

In the first nine months of 2024, the total number of property transactions in Hong Kong rose by 7.4% y-o-y to 38,001 units, following annual declines of 4.5% in 2023 and 39.4% in 2022, based on figures released by RVD. Likewise, sales volume increased by 2% y-o-y to HK$ 327.26 billion (US$ 42.05 billion) over the same period, an improvement from annual contractions of 4.5% in 2023 and 44.4% in 2022.

As a result of the government lifting all market cooling measures earlier this year, Mainland Chinese homebuyers flocked to the Hong Kong property market between January and September 2024, driving transaction levels to record highs.

Though there were wide variations in sales movements in the primary and secondary markets during the first nine months of 2024:

• Primary market property sales were up strongly by 34.1% y-o-y to 11,920 units, following a modest growth of 4.2% in 2023 and a huge contraction of 41.6% in 2022, based on data from RVD. Likewise, total transaction values increased by 26.4% to HK$135.05 billion (US$17.35 billion), following annual growth of 16.3% last year and a huge fall of 52.5% two years ago.
• Secondary market property sales fell slightly by 1.6% y-o-y to 26,081 units in Jan-Sep 2024, after declining by 7.2% in 2023 and 38.7% in 2022. Also, transaction values were down by 10.2% y-o-y to HK$192.21 billion (US$24.7 billion), following annual falls of 12.2% in 2023 and 40.8% two years ago.

This is in line with the recent figures released by the Land Registry, which showed that a total of 54,780 properties changed hands in the first ten months of 2024, up by 8% from the same period last year, in contrast to a 2.7% fall in 2023. Similarly, the total value of property transactions increased slightly by 1.8% y-o-y to HK$427.2 billion (US$54.9 billion) over the same period, an improvement from an annual decline of 13.8% in the whole year of 2023.

Property market curbs scrapped

To revive the struggling housing market, Hong Kong removed all extra stamp duties in February 2024, following pressure to lift long-standing housing market cooling measures, according to finance chief Paul Chan.

The decade-old property cooling measures have been lifted, including the Buyer's Stamp Duty targeting non-permanent residents, the New Residential Stamp Duty for second-time buyers, and the Special Stamp Duty aimed at homeowners who sold their property within two years.

"After prudent consideration of the overall current situation, we decide to cancel all demand side management measures for residential properties with immediate effect, that is, no Special Stamp Duty, Buyer's Stamp Duty, or New Residential Stamp Duty needs to be paid for any residential property transactions starting from today," said Chan. "We consider that the relevant measures are no longer necessary amidst the current economic and market conditions."

In October 2023, Chief Executive John Lee announced a partial easing of extra stamp duties - the first time that the property cooling measures were relaxed in over a decade. Among the property market curbs relaxed:

• The Buyer's Stamp Duty (BSD) and the New Residential Stamp Duty (NRSD) were halved from 15% to 7.5%.
• The Special Stamp Duty (SSD) - equivalent to 10% of the property price - that was previously imposed on transactions involving property held for less than three years will now only apply to transactions for property held for less than two years.
• All stamp duties on property purchases by newly-arrived foreign talents in Hong Kong are suspended, but it is subject to the new residents obtaining permanent residency.
• Stamp duties paid by second-home buyers and non-locals were also halved from a maximum of 30% to 15%.

Earlier in September 2022, the Hong Kong Monetary Authority (HKMA) relaxed its stress-test requirements for new mortgage borrowers by 100 basis points, effectively making the test easier to pass. The recent move came amidst falling property demand, after homebuyers saw their purchasing power fall by HK$1 million (US$128,500) since January 2022, following increases in both HIBOR and banks' prime rates.

Several rounds of market-cooling measures

Before the recent relaxation of property curbs, the HK government implemented several rounds of housing market-cooling measures in the past years to reduce speculative buying and regulate house price growth.

To discourage developers from hoarding, in June 2018 Carrie Lam introduced a vacancy tax on unsold homes that are not leased or have remained unoccupied six months after receiving an occupation permit. The tax rate is two times the rental income or 5% of the home's value.

Aside from the tax, the government also allocated nine plots of land, including three in the prime Kai Tak district, for public housing.

In addition, the Hong Kong Monetary Authority (HKMA) imposed new restrictions on bank lending to property developers in May 2017, restricting loans to property developers to a maximum of 40% of a site's value, replacing the earlier limit of 50%. Also, the number of loans allowed for residential property with a value less than HK$10 million (US$1.28 million) was reduced from 60% to 50% and those with a value exceeding HK$10 million (US$1.28 million) were also cut from 50% to 40%.

In addition, a 30-person Land Supply Task Force was set up to consider long-term solutions to Hong Kong's housing crisis, given the outcry about 'coffin homes'.

In recent years, Hong Kong's government has leaned against property price rises:

• In November 2010, the government imposed a 'flip tax' of 15% on properties resold within six months (though in May 2014 the rule was somewhat relaxed), and doubled stamp duties to 8.5% on properties worth HK$20 million (US$2.6 million) or more.
• On October 26, 2012, the government imposed a 15% extra tax on property purchases made by foreigners.
• In February 2013, the government doubled the stamp duty on all property transactions worth more than HK$2 million (US$257,000), though again, this measure ended in May 2014.
• In April 2013, the Residential Properties (First-hand Sales) Ordinance to shield buyers from dishonest sales practices came into full effect.
• In February 2015, the government required buyers of self-used residential properties valued under HK$7 million (US$900,000) to make larger down payments.
• In November 2016, the government raised stamp duties for all property transactions to 15%, except for first-time homebuyers who are charged just 4.25%. However, house price rises continued to accelerate, amidst a surge in the number of multiple home purchases on one single transaction as investors take advantage of lower tax rates.
• To close the loophole, the government also announced that first-time homebuyers acquiring more than one property in a single contract will be charged the same 15% stamp duty that applies to purchases of a second property starting April 2017.

Supply Highlights:

Residential construction activity remains weak

Completions plummeted by 34.6% y-o-y to 13,852 in 2023, following strong growth of 47.1% in 2022, according to figures released by RVD.

During 2023:

• Class A completions (properties with an area of 40 sq. m. and below) fell by 21% y-o-y to 7,806 units, following a surge of 88.2% in 2022.
• Class B completions (40 to 69.9 sq. m.) dropped 39.1% y-o-y to 4,667 units last year, in contrast to an annual increase of 15.8% in 2022.
• Class C completions (70 to 99.9 sq. m.) continued to fall by a huge 48.2% y-o-y to 1,060 units, following a 4.4% decline in 2022.
• Class D completions (100 to 159.9 sq. m.) fell by 85.1% to just 157 units, after a growth of 322.5% in the prior year.
• Class E completions (160 sq. m. and above) fell by 68.9% from a year earlier to 162 units, in contrast to a surge of 330.6% in the prior year.

Then in the first nine months of 2024, there were 10,921 dwelling units completed in Hong Kong. About 56% of these are properties with an area of 40 sq. m. and below.

The stock of flats in Hong Kong totaled 3,005,000 units in 2024, up by 6.5% from 2,821,000 units in 2019, according to the Housing in Figures 2024 report released by the Housing Bureau. Of these, 1,311,000 units are public permanent housing while the remaining 1,695,000 units are private housing.

How to solve Hong Kong's chronic housing shortage?

Increasing supply is the key.

"We are looking at a shortfall of at least 1,200 hectares of land to meet our future supply and demand, and this is not taking into account extra land needed to improve the living space of each individual," said Task Force on Land Supply chairman Stanley Wong Yuen-fai.

The government recently unveiled Hong Kong's first major reclamation project since 2003, at an estimated cost of HK$20.5 billion (US$2.63 billion). Scheduled for completion by 2030, it will reclaim 130 hectares off northern Lantau and extend Tung Chung's new town to provide 49,000 flats for 144,000 people, plus 870,000 sq.m. of commercial floor area.

"It will greatly help solve the current shortage of housing," said Financial Secretary Paul Chan. Besides this, the government's 10-year housing strategy aims to provide land for 28,000 public flats annually, alongside 18,000 private homes.

Following Chinese President Xi Jinping's call on Hong Kong to provide "more decent" homes for the poor, the HK government has recently unveiled a HK$26.4 billion (US$3.39 million) light housing project that plans to build about 30,000 temporary apartments over the next five years. This will give people an option to move out of cramped quarters, like the city's infamous "coffin homes", while waiting for public housing. However, the new scheme has faced public backlash because of its high cost and since it is seen as merely a band-aid solution to the city's festering housing crisis.

In October 2024, the government released its Long Term Housing Strategy Annual Progress Report 2024, setting its 10-year supply target at 440,000 units. This goal includes a target of 308,000 units for public housing and 132,000 units for private housing. At the same time, the Housing Bureau will propose three key areas for improvement:

1. Maintain a supply-led approach with flexibility to enhance housing availability.
2. Strengthen the housing ladder to encourage homeownership among young people.
3. Ensure the efficient use of public rental housing (PRH) resources and encourage PRH tenants to progress on the housing ladder.

Some development projects are also underway that could dramatically increase the city's housing stock.

"Two major projects could add substantially to Hong Kong's housing stock. The "Northern Metropolis," virtually adjacent to neighboring Shenzhen would add more than 900,000 new housing units over the next two decades, with a target of more than 40% to be completed by 2032," said the Demographia International Housing Affordability 2024 report. "Another project, Lantau Vision Tomorrow would add more than 200,000 new housing units on reclaimed islands near Hong Kong International Airport. This significant addition of housing units could moderate Hong Kong's still high housing costs."

The total housing stock stood at 1,269,831 units in early 2024, up by only 1% from the previous year, according to the RVD.

Rental Market:

Rental yields gradually increasing, but still low by international standards

While Hong Kong's rental yields are gradually rising, they remained extremely low by international standards, which can be attributed to the surge in property prices in the past decade. Hong Kong is not a 'typical' market. It is a place where the rich choose to park assets in the form of apartments, as part of a diversified asset-safeguard strategy - like Monaco and Singapore. Such markets typically have lower rental yields than more 'normal' housing markets.

Rental yields in Hong Kong in September 2024:

• Property Class A (properties with an area of 40 sq. m. and below) rental yields were 3.7%, up from 3.1% a year ago and 2.6% two years earlier, according to figures from RVD.
• Property Class B (40 to 69.9 sq. m.) rental yields stood at 3.2%, up from 2.6% in the previous year and 2.3% two years ago.
• Property Class C (70 to 99.9 sq. m.) rental yields were 2.9%, higher than the 2.4% a year earlier and 2.1% two years ago.
• Property Class D (100 to 159.9 sq. m.) rental yields averaged 2.6%, up from 2.3% in September 2023 and 2.1% in September 2022.
• Property Class E (160 sq. m. and above) rental yields were 2.4%, up from 2.1% a year earlier and 2% two years ago.

This is supported by the recent research conducted by the Global Property Guide, which showed that the average gross rental yields in Hong Kong stood at 3.52% in Q3 2024, up from 3.39% in Q1 2024. Over the same period:

• In New Territories, gross rental yields for apartments ranged from 2.15% to 4.66% in Q3 2024, with a city average of 3.33%.
• In Kowloon, apartments offer rental yields between 2.32% and 4.99%, with a city average of 3.53%.
• In the Outlying Islands, rental yields ranged from 3.45% to 4.04%, with a city average of 3.7%.

Rental rates movements

Rents vary considerably in Hong Kong, with smaller-sized apartments showing stronger rent increases as compared to bigger-sized apartments.

In Q3 2024:

• Rents for apartments smaller than 40 sqm were up by 7.9% from a year earlier, to an average of HK$ 504 (US$ 65) per sqm per month.
• Rents for 40-69.9 sqm apartments rose by 5.2% y-o-y, to HK$ 402 (US$ 52) per sqm per month.
• Rents for 70-99.9 sqm apartments rose by 6.9% y-o-y, to HK$ 436 (US$ 56) per sqm per month.
• Rents for 100-159.9 sqm apartments rose by 5.3% y-o-y, to HK$ 453 (US$ 58) per sqm per month.
• Rents for apartments larger than 160 sqm were up slightly by 1.8% y-o-y, HK$442 (US$57) per sqm per month.

Mortgage Market:

Interest rates are now falling again

In its November 2024 meeting, the HKMA slashed its base rate by another 25 basis points to 5%, following a 50-basis point rate cut in September 2024. The HKMA moves in lockstep with the Fed, giving the local currency's peg to the US dollar.

"Following the 25-basis point downward adjustment in the target range for the US federal funds rate on 7 November (US time), 50 basis points above the lower end of the prevailing target range for the US federal funds rate is 5%, while the average of the five-day moving averages of the overnight and one-month HIBORs is 3.87%. The Base Rate is therefore set at 5% according to the pre-set formula," said the HKMA.

Hong Kong's currency has been pegged at around HK$7.8 per U.S. dollar since October 1983, so when the US Federal Reserve interest rates move, so do Hong Kong's interest rates.

Prior to the monetary policy shift, the base rate was kept unchanged at 5.75% from July 2023 to August 2024, after raising it eleven consecutive times since March 2022, in an effort to rein in inflationary pressures.

As such, major banks' best lending rates have started to decline in Hong Kong. Recently, HSBC Holdings PLC announced that it will cut its best lending rate by 25 basis points from 5.625% in September 2024 to 5.375% in November 2024. Likewise, Bank of China (Hong Kong) and Hang Seng Bank also slashed their best lending rate this month by 25 basis points to 5.375%. This is now the lowest level since November 2022.

Standard Chartered, Bank of East Asia, and ICBC (Asia) also trimmed their best lending rate by 25 basis points to 5.625%.

Fixed-rate mortgage scheme converted from pilot to permanent program

At the height of the Covid-19 pandemic, the Hong Kong Mortgage Corporation Limited (HKMC) introduced a pilot scheme for fixed-rate mortgages for 10, 15, and 20 years, to reduce homebuyers' risks from interest rate volatility, thereby improving the banking sector's long-run stability. The maximum loan amount for residential mortgages under the scheme is HK$10 million (US$1.28 million). At the end of the fixed-rate period, the borrower has the option to re-fix the mortgage rate or convert it to a floating-rate loan.

In October 2021, HKMC announced that the scheme would be converted from a pilot program into a permanent offering starting from November 1, 2021.

"Proposed in the 2020-21 Budget, the Fixed-rate Mortgage Scheme has approved loans totaling around HK$400 million in the past year and a half. This reflects a certain market demand for fixed-rate mortgage products," said Financial Secretary Paul Chan. "The scheme has filled a market gap, and its permanent offer will continue to provide an alternative financing option to homebuyers for mitigating their risks arising from interest rate volatility, thereby enhancing banking stability in the long run."

The fixed interest rates per annum under the scheme, which was maintained until January 2022, were as follows:

After that, the new rates are announced monthly. Currently, the new fixed interest rates are as follows, based on the HKMC website:

• For 10-year mortgage loans: 4.74%
• For 15-year mortgage loans: 4.89%
• For 20-year mortgage loans: 5.04%

The application period is from September 26, 2024, until further notice. The drawdown period is within two months upon receipt of the application by the bank.

New mortgage lending plunging

New residential mortgage loans approved fell sharply by 26.5% to 3,771 in September 2024 as compared to 5,130 in the same period last year, according to the HKMA figures. Likewise, the value of newly approved residential mortgage loans plunged by 32.1% y-o-y to HK$17.32 billion (US$2.23 billion) in September 2024.

The secondary market accounted for about 60.8% share of all new mortgage loans approved during the period. The primary market and refinancing accounted for 26.7% and 12.6%, respectively.

Due to a decline in new loans, the value of mortgage loans outstanding increased only by a meager 0.9% to HK$ 1.87 trillion (US$240.65 billion) in September 2024 from a year earlier, following growth of 2.5% in 2023, 4.2% in 2022, 9.8% in 2021, 7.8% in 2020, and 9.8% in 2019, based on figures from the HKMA.

The average loan-to-value (LTV) ratio of newly approved loans stood at 59.6% in September 2024, slightly down from 59.9% in the previous month but up from 54.5% a year earlier.

Over the same period, the mortgage delinquency ratio remained low at about 0.07 to 0.11 while the rescheduled loan ratio was unchanged at 0.00%.

As a percentage of GDP, the size of the mortgage market was equivalent to about 62.2% in 2023, down from 64.4% in 2022 but still the second-highest level ever recorded.

Socio-Economic Context:

HK economy growing modestly, tourism sector continues to recover

Hong Kong's service-oriented economy grew by 3.2% in 2023 from a year earlier, in stark contrast to the contraction of 3.5% recorded in the prior year. To boost economic activity, the HK government unveiled a number of measures last year, including offering cash handouts to residents, cutting salaries tax, and attracting more workers and foreign investments.

In the third quarter of 2024, the HK economy recorded a real GDP growth rate of 1.8% over a year earlier, following annual increases of 3.3% in Q2 and 2.8% in Q1, according to government figures. It is now the seventh consecutive quarter of year-on-year growth. However, on a seasonally adjusted quarter-on-quarter basis, real GDP contracted by 1.1% in Q3 2024, after growing by 0.3% in Q2 and 2.5% in Q1.

"While the external environment has turned more challenging recently, the Hong Kong economy is expected to maintain its growth momentum for the remainder of the year. Increased global economic uncertainties and escalation of trade conflicts would affect the performance of our goods exports," said the HK government. "Nonetheless, the expected further monetary easing by major central banks, together with the Mainland's recent introduction of various measures to stimulate the economy, would help support sentiment and activities in our domestic market."

Overall, the government forecasts that the HK economy will grow by 2.5% this year.

In September 2024, the value of exports of goods increased by 4.7% y-o-y to HK$398.1 billion (US$51.15 billion) while goods imports rose by 1.4% over the same period to HK$451.3 billion (US$57.99 billion), resulting to a trade deficit of HK$53.2 billion (US$6.84 billion). For the first nine months of 2024, the total value of exports of goods rose strongly by 10.7% from the same period last year while goods imports were up by 7.1%. This resulted in a trade deficit of HK$ 270 billion (US$34.69 billion), equivalent to 7.5% of the value of imports of goods over the said period.

Tourism continues to recover. During 2023, visitor arrivals in Hong Kong reached 34 million people, more than 56 times from the arrivals recorded in the prior year, according to figures from the Hong Kong Tourism Board (HKTB). Nearly 79% of the total number of arrivals came from Mainland China.

Then in the first nine months of 2024, arrivals soared further by 39.7% to 32.59 million people as compared to the same period last year. Visitors from Mainland China, who accounted for more than 77% of total arrivals, surged by 35.1% y-o-y to 25.24 million over the same period.

In September 2024, the average hotel room occupancy rate stood at 81%, down from 90% in the previous month but up from 78% in the same period last year, according to the Culture, Sports and Tourism Bureau.

Tourist arrivals averaged about 56 million people annually from 2011 to 2019. However, tourism became almost nonexistent in the following three years due to pandemic-related travel restrictions. Arrivals dropped to 3.57 million people in 2020, and then to just 91,398 people in 2021 and 604,564 people in 2022.

The HK economy suffered greatly for most of 2019 from social unrest as well as the US-China trade tensions, and for the whole year of 2020 from the COVID-19 pandemic. In 2020, real GDP contracted by about 6.5% from a year earlier, following a decline of 1.7% in 2019. When the first COVID-19 case was detected in January 2020, the HK government immediately rolled out social distancing measures and travel restrictions, putting further strain on the already ailing economy.

The HK economy grew by an annual average of 3.8% from 2000 to 2018.

Inflation remains manageable. In October 2024, overall inflation eased to 1.4%, down from 2.2% in the previous month and 2.7% a year earlier, according to the Census and Statistics Department. Hong Kong's inflation rate averaged 3.3% from 2010 to 2019 before slowing sharply to 0.25% in 2020. Then inflation rose again to 1.6% in 2021, 1.9% in 2022 and 2.1% in 2023.

The labor market is stable. In Q3 2024, the seasonally-adjusted unemployment rate was 3%, unchanged from the previous quarter but slightly up from 2.8% a year ago, based on figures from the Census and Statistics Department.

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21. Hong Kong Steps Up Efforts to Fix Housing Crisis After Xi Push (Bloomberg): https://www.bloomberg.com/
22. Backlash over $3.4 billion Hong Kong housing scheme poses a headache for Lee (Reuters): https://www.reuters.com/
23. Hong Kong leader announces measures to address the housing crisis in annual policy address (CNBC): https://www.cnbc.com/
24. Housing strategy report updated (News.gov.hk): https://www.news.gov.hk/.
25. Table 650-80001: Visitor arrivals by country/region of residence (Census and Statistics Department): https://www.censtatd.gov.hk/
26. Hong Kong Consumer Price Index (Trading Economics): https://tradingeconomics.com/
27. Hong Kong Prime Lending Rate (Trading Economics): https://tradingeconomics.com/
28. Gross Domestic Product and its major components (Hong Kong Economy): https://www.hkeconomy.gov.hk/
29. External Merchandise Trade Statistics for September 2024 (Census and Statistics Department): https://www.censtatd.gov.hk/
30. Tourism (Census and Statistics Department): https://www.censtatd.gov.hk/
31. Hotel room occupancy rate (Data.gov.hk): https://data.gov.hk/
32. Table 510-60001: Consumer Price Indices (October 2019 - September 2020 = 100) (Census and Statistics Department): https://www.censtatd.gov.hk/
33. Table 210-06101: Statistics on the labor force, employment, unemployment, and underemployment (Census and Statistics Department): https://www.censtatd.gov.hk/