House prices down by 3.65% y-o-y in Q3 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 average transaction price of residential units fell by 3.65% during the year to Q3 2019, in contrast to a y-o-y rise of 5.49% a year earlier. It was the second consecutive y-o-y decline since Q3 2016. Quarter-on-quarter, house prices fell by 1.08% 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 and the Brexit, among others.
Both demand and supply are plummeting. In H1 2019, residential property transactions in Macau fell by 38.6% y-o-y to 4,104 while transaction values plunged 42.1%. Likewise, residential permits and completions were down by 86% and 92%, respectively.
Rents, rental yields: no yields data available for Macau.
Recent news. Macau's economy contracted by a total of 2.5% during the first half of this year from the same period last year. Macau’s economy is expected to shrink by 1.3% this year and by another 1.1% in 2020, based on IMF estimates. In the first three quarters of 2019, gross gaming revenue for Macau casino operators amounted to MOP 220.93 billion (US$27.27 billion), down by 1.8% from a year earlier, according to the Statistics and Census Service (DSEC). This was in sharp contrast to y-o-y growth of 14% in 2018 and 19% in 2017.