Purchasing Power Released, Yearly Property Prices Forecast to Surge Over 10% - New World Development’s Hanlin Chen Sees Robust Economic Performance and Luxury Homes Outpacing the Market

The property market has been steadily heating up, with new launches driving the entire market. Hanlin Chen, Executive Director of New World Development's Property Agency, forecasts a year-on-year increase in property prices of over 10% for the year, largely due to low interest rates, decreasing inventory of unsold units, and the release of purchasing power. The high-end market is seeing a strong surge in demand, with wealthy individuals showing increased interest in the market, likely leading to a surge in the luxury market outpacing smaller units. Although interest rates may rise this year, local banks are not expected to follow, minimizing the impact on home buyers.

Residential prices are expected to rise by more than 10% in 2023, according to analysis from Miramar, which notes that the city's property market is showing a steady and healthy upward trend. Mandy Chan, executive director of Landmark Agency, forecast a year-on-year increase of over 10% in the real estate market throughout 2023, with the overall market outlook remaining stable. High-net-worth individuals are showing strong interest in the market, which is expected to drive the trend for luxury properties to outperform mid-to-low-end residential units. This is supported by the ongoing strong release of purchasing power, an ideal start to the property market in 2023, and the sustained low interest rates. Mandy Chan pointed out that interest rates are projected to increase this year but likely only marginally, having a minimal impact on homebuyers' financial burdens. The SIERRA SEA phase 2C (2) in Tseung Kwan O has been selling out rapidly, with all units sold within the first few days of each promotional round, indicating widespread release of purchasing power. The project has sold over 3,500 units in 18 months, generating more than HK$22 billion from the sale of units and parking spaces. The high demand for the project in the secondary market is equally impressive, with unit prices reaching up to HKD15,000 to HKD16,000 per square foot, and several rental cases exceeding HKD50 per square foot, offering strong returns. Mandys also highlighted the growing interest of high-net-worth individuals in the real estate market, driven by the continued influx of talents and international students coming to Hong Kong. This is expected to support the property market across different segments, particularly luxury homes, which are expected to see prices rise more sharply than mid-to-low-end units. Landmark has announced upcoming projects in Kwun Tong North, including the named project in Yoho Seasons and One Centric, which are set to debut in the near future, while the SIERRA SEA project in Kwun Tong North is anticipated to launch in the first half of 2024, focusing on smaller units to cater to a diverse range of customers.