Lower rates fail to lift transactions on Hong Kong’s secondary property market

The new cycle of interest rate cuts spurred by the Fed failed to lift Hong Kong’s secondary property market over the weekend

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A man passed a real estate agency in Taikoo. Photo: SCMP/Eugene Lee

Published: 10:25am, 23 Sep 2024Updated: 2:12pm, 13 Jan 2025

The new cycle of interest rate cuts spurred by the US Federal Reserve failed to lift Hong Kong’s secondary property market over the weekend, as cautious buyers from the mainland stayed on the sidelines.

Only seven deals got done over the weekend, a decline of 53.3 per cent from a week earlier, marking a new eight-week low, according to Centaline Property. South Horizons in Aberdeen saw three transactions, Metro City in Po Lam had one, there was one in Whampoa Garden and one in Caribbean Coast in Tung Chung.

Lower rates haven’t had the desired effect, and the city has not experienced a rebound like it did after property cooling measures were withdrawn in late February, according to Louis Chan Wing-kit, CEO of the residential division at Centaline Property Agency.

“This is mainly due to the slow response from mainland buyers and investors, who are still holding a wait-and-see attitude and have not yet entered the market,” he said. “The market is now mainly supported by local buyers, and therefore has not seen an immediate improvement.”

Transactions on the secondary market may have been down following the first cut in borrowing costs in nearly five years, but more people made appointments to look at flats. A total of 1,130 bookings were made over the weekend at 50 estates in Hong Kong, up 7.6 per cent from a week earlier – hitting a new high for the past 21 weekends – Ricacorp Properties said on Friday. Appointment bookings have now risen for nine weeks in a row.

Hong Kong’s largest commercial banks lowered their prime lending rates last week. These decisions came after the Hong Kong Monetary Authority cut its base rate to 5.25 per cent from 5.75 per cent, in lockstep with the Federal Reserve.

HSBC lowered its prime rate by a quarter-point to 5.625 per cent, while Bank of China (Hong Kong) said it would reduce its benchmark to the same level. Standard Chartered and Bank of East Asia will pare their prime rates to 5.875 per cent. Local lenders raised their lending rates by a total of 87.5 basis points during the cycle that just ended.