Hong Kong property market deal flow seen slowing further after transaction volumes fall to a five-month low in June

Property transaction volumes in Hong Kong fell to a five month low in June after declining by a tenth from a month ago, shaving nearly a quarter from the previous year’s levels as caution prevailed in one of the world’s priciest real estate markets, official data showed on Tuesday.

The number of properties changing hands, including residential, commercial and industrial units and parking spaces, struck a five-month low of 4,777 in June, down 9.6 per cent from May, according to data released by Hong Kong’s Land Registry on Tuesday. Transactions are down 24.1 per cent from June 2022 when 6,290 deals were struck and 44.4 per cent lower than the March level of 8,599, which was a 20-month high at that time.

Deal flow could shrivel for the fourth straight month hitting lows not seen since January, experts say.

“Although the United States and Hong Kong both suspended interest rate hikes in mid-June, the message is that there are still two chances of interest rate rises in the future, which made the markets cautious,” said Derek Chan, head of research at the real estate agency. “The overall transaction volume will remain under pressure this month.”

The corresponding value of the deals struck fell 11 per cent month on month to HK$39.67 billion (US$5.07 billion) in June. The decline in transaction value follows the slide in prices of lived-in homes in May, the first fall this year, as rising interest rates soured appetite.

That trend is unlikely to reverse any time soon- Hong Kong Monetary Authority CEO Eddie Yue Wai-man warned in June that the cycle of rising interest rates was far from over despite the de facto central bank hitting the pause button following 10 straight increases in its base rate since March 2022.