HONG KONG – Hong Kong’s struggling property market has shown marked signs of improvement since the government scrapped all home buying curbs in late February.

The volume of property sales in April so far – more than 8,200 transactions as at April 24 – is on track to be the highest since at least March 2023, when the figure was 8,599, according to data from Hong Kong’s Land Registry and Centaline Property Market Big Data.

With a week to go before the month ends, the figure could even close at the highest since July 2021, when transactions totalled 9,957.

The government’s removal of all property cooling measures on Feb 28 has been a boon for buyers, sellers, developers and property agents alike, as it made for a more liquid market in which assets could be traded more efficiently, an academic said.

The decade-old curbs comprised stamp duties on non-permanent residents, non-first-time buyers and those who sold their homes within two years.

Eased mortgage rules have also helped. Buyers of homes under HK$30 million (S$5.2 million) can now obtain 70 per cent of mortgage financing, from 60 per cent previously.

April’s strong sales follow transactions hitting a 10-month high in March, when 5,013 deals were closed – a 57 per cent surge compared with the previous month.

On the weekend of April 20, buyers snapped up three in four of the 168 new flats offered by developer Wheelock Properties in Lohas Park, Tseung Kwan O. An earlier phase of sales in March saw nearly 90 per cent of 570 flats sold.

The previous weekend on April 13, seven in 10 of 184 new flats offered by another developer, CK Asset, in Wong Chuk Hang were sold. The Blue Coast project’s first round of sales a week earlier saw 98 per cent of 422 units snapped up.

Other developers, including New World Development and Henderson Land, have also launched new home sales to warm reception.

“Removing the curbs was a good move to improve the liquidity of the property market,” Professor Kelvin Wong, founder of The University of Hong Kong’s (HKU) Real Estate Lab, told The Straits Times. The lab, a research arm under HKU’s faculty of architecture, seeks to further real estate knowledge in the city.

“Buyers and sellers can trade more easily, meeting each other’s different consumption and investment needs. With more transactions, the market can also discover and adjust the intrinsic value of the properties more efficiently.”

The renewed flurry of activity is good news for real estate developers and agents, who have suffered from low sales volumes and falling home prices in recent years amid high interest rates and other economic headwinds.

But, while scrapping the curbs has reinvigorated the flagging market, Prof Wong said “it would not necessarily boost property prices”.

“When the property curbs were levied a decade ago, property prices did not come down, so undoing the taxes alone should not be expected to drive prices up,” he said.

Prices have gone in the opposite direction, with a greater supply of flats in the market meeting existing demand, combined with persistently high interest rates deterring some prospective buyers. Hong Kong’s interest rates move in lockstep with those in the US due to its currency peg to the greenback.

The city’s property prices saw a yearly decline of about 7 per cent to 9 per cent, Financial Secretary Paul Chan said on April 23.

Developers and agents, desperate for transactions, have cut many of the latest deals at deep discounts.

The first batch of Wheelock’s brand new Lohas Park apartments were sold at 8 per cent lower than the average asking per sq ft price of resale units in the vicinity. CK Asset’s Blue Coast flats were 27 per cent cheaper than the average per sq ft price of new homes in nearby development La Montagne, sold just eight months earlier.

The downward trend looks set to continue, with the US Federal Reserve reluctant to lower interest rates for now and Hong Kong developers due to release more units for sale in the coming months.

Property consultancy JLL Hong Kong has estimated that more than 20,000 new flats remain unsold in the market. Having more new flats available – and at big discounts – will push down prices of resale units, which are now also in greater supply as home owners are no longer taxed for selling early.

Average prices of resale homes have already dropped by nearly a quarter since a peak in August 2021. In February, they reached their lowest level since September 2016. S&P Global Ratings has said it expects prices to fall a further 5 per cent to 10 per cent in 2024.

Public flats have been affected, too, with more than 130 cases of people pulling out of deals in March as cheaper private homes or bigger units fell within their means.

Officer worker Mandy Tse, an aspiring private home owner in her 40s, is glad that the city’s overvalued home prices are moderating even after the property curbs’ removal, which was seen to benefit non-locals and investors more.

“This makes homes more affordable for regular Hong Kongers like me,” said Ms Tse, who lives with her family in a 300 sq ft rented flat in Kowloon.

“But many buyers are still rich investors and mainlanders rather than locals who truly want a home to call their own. I hope this can change over time.”