House prices down by 3.04% y-o-y in 2019

Macau’s housing market is now cooling rapidly, as slower economic growth in Mainland China, as well as the civil unrest in Hong Kong, is hitting Macau’s gaming and property sectors. The fallout from the fast-spreading COVID-19 adds another blow to Macau’s already ailing economy.

The average transaction price of residential units fell by 3.04% during 2019, in contrast to a y-o-y rise of 4.71% a year earlier. Quarter-on-quarter, house prices fell by 0.59% during the latest quarter.

Macau’s housing market grew strongly in the past three years, supported by robust economic growth and massive infrastructure investments. The economy was estimated to have expanded by 4.7% in 2018, down from a spectacular 9.1% in 2017, but a sharp turnaround from y-o-y declines of 0.9% in 2016, 21.6% in 2015, and 1.2% in 2014.

  • The 200,000 sq. m. Taipa maritime terminal began operations in June 2017, increasing travel within Macau and its neighbouring cities, and providing direct connections to the planned light rail transit system.
  • Construction of the Gongbei tunnel, the only link connecting Zhuhai with the Hong Kong-Zhuhai-Macau bridge, started in April 2017. The bridge is scheduled to open this year.
  • The Shenzhen-Zhongshan tunnel, a key infrastructure development in the Greater Pearl River Delta, is also under construction. The project, scheduled for completion in 2020, will reduce the average travel time between Shenzhen and Zhongshan from two hours to less than 30 minutes.
  • Beijing has also committed to a comprehensive Guangdong-Hong Kong-Macau Bay Area development plan to increase connectivity, trade and investment between the three regions.

However, the housing market is now weakening, as investor sentiment sours and developers hold off on new projects mainly due to external economic uncertainty caused by the US-China trade war, social unrest in Hong Kong, the Brexit, and now the COVID-19 outbreak.

Demand is now plummeting. During 2019, residential property transactions in Macau fell by 23.5% y-o-y to 8,277 units while transaction values plunged 26.5%. Demand is expected to remain depressed this year.

Rents, rental yields: no yields data available for Macau.

Recent news. Macau’s economy is struggling,with real GDP contracting by an estimated 2.5% in 2019 from a year earlier, amidst depressed gaming industry, according to Fitch Ratings. In 2019, gross gaming revenues fell by 3.4% to MOP 292.5 billion (US$36.5 billion) from a year earlier, based on figures from the Gaming Inspection and Coordination Bureau (DICJ). This was in sharp contrast to y-o-y growth of 14% in 2018 and 19% in 2017.Macau’s economy is projected to contract further by 3.7% y-o-y in 2020, with the COVID-19 outbreak expected to put more dent on its struggling gaming and tourism sectors.

In February 2020, the Macau government has imposed a 15-day closure of all 41 casinos in the city, as part of its effort to contain the spread of the new coronavirus. Experts estimate that the temporary suspension of casino operations could lead to gaming revenues losses of about US$900 million to US$1.5 billion. 

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