House prices up by 1.94% during the year to Q3 2021

Hong Kong’s housing market is stabilizing, after it took severe blows from several market-cooling measures, the impact of the violent protests, the US-China trade war, and now the pandemic. Hong Kong’s residential property prices rose by 1.94% during the year to Q3 2021, following y-o-y rises of 0.89% in Q2, 2.41% in Q1. On a quarterly basis, house prices increased 2.5% in Q3 2021.

Over the past twelve years, Hong Kong’s residential property prices have skyrocketed by 162% (inflation-adjusted). In contrast, real incomes have virtually stagnated in Hong Kong for years. However, due to the combined impact of market-cooling measures, violent protests, the US-China trade war and the ongoing COVID-19 pandemic, Hong Kong’s housing market has stabilized over the past two years.


Demand and supply rising strongly

In the primary market, the number of property sales surged almost 30% y-o-y to 14,268 units in the first ten months of 2021 and sales values increased 58% to HK$ 194.72 billion (US$25 billion), according to the Ratings and Valuation Department (RVD). In the secondary market, property sales rose by about 34.7% to 49,475 units, and transaction values increased 42.6% to HK$ 439.4 billion (US$56.4 billion).

Construction activity is also rising strongly. Completions surged 34.6% to 20,888 in 2020 from a year earlier, following a y-o-y decline of 34.9% in 2019.

Rents, rental yields: poor yields, at just above 2%

Apartment costs in Hong Kong are very high, at around $28,570 per sq. m. 

Hong Kong: typical city centre apartment buying price, monthly rent (130 sq. m)
  Buying price Rate per month Yield
  $3,714,113  $7,267 2.35%

Recent news: Hong Kong’s economy bounced back strongly

Hong Kong’s economy has been growing strongly in the past three quarters, expanding by 8% y-o-y in Q1 2021, by 7.6% in Q2 and by another 5.4% in Q3, finally ending a six-quarter recession, thanks to a rebound in private consumption, business investment as well as exports. Recently, the International Monetary Fund (IMF) upgraded again its 2021 economic growth forecast for Hong Kong to 6.4% from its earlier estimate of 4.3%.

Months of violent protests and the US-China trade war forced HK’s economy into its first recession in a decade in 2019, contracting by 1.2%. Then the COVID-19 pandemic worsened the situation, causing the economy to shrink further by about 6.1% in 2020 from a year earlier. The Hong Kong economy grew by an annual average of 3.8% from 2000 to 2018.