Hong Kong housing market sentiment slowly improves amid cautious optimism for 2023

The January 2023 RICS-Spacious Hong Kong Residential Property Monitor paints the picture of a cautiously improving housing market with net sentiment rising towards a flatter outlook. The Confidence Index improved from -22 in December to -6 this month, reflecting the continued positive impact of China’s emergence from covid lockdowns.

The latest net balance for new buyer enquires, while still in negative territory, continued to improve, posting a reading of -14% compared to figures of -23% and -60% in December and November 2022, respectively. Buyers from the Chinese Mainland have contributed significantly to this trend, with the net balance for the series rebounding from -53% to a much flatter -3%. Meanwhile, feedback on enquiries from investors and owner-occupiers remained relatively stable, returning net balance readings of -27% and +2%, respectively.

Credit conditions also saw a slight move towards a flatter reading with the aggregated metric recording a net balance of -24% compared to -35% in December.

Longer-term, there is some hope for improvement. Expectations for residential sales volume picked up, with a net balance of +18% of respondents now anticipating an increase in activity. This is seven points up from the previous measurement. Alongside this, twelve-month price expectations turned positive, rising from a net balance of -19% last month to +16% in January.

The lettings market presents a mixed picture, depending on the locality. While Hong Kong Island and Kowloon saw improvements, with the latest demand net balances rising from -11% to +5% and -16% to -8%, respectively, the New Territories saw a weakening in the tenant demand series, falling from a net balance of -9% to -19%. With respect to rental prices, the aggregated measure capturing changes over the past three months returned a much less negative net balance of -21% compared to the -50% recorded in December.

Donglai Luo, Senior Economist at RICS, said:

“More positive signs in Hong Kong’s property market are emerging as market sentiment cautiously continues to recover after the lifting of covid lockdowns. This is evidenced by increased sales market activity along with positive longer-term rental and price expectations.”

-ENDS-

Notes for editors:

Commentary from survey respondents regionally can be found in the economic pdf on the back pages – you are free to use these.

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