Despite signs of a potential rebound in Hong Kong’s property market in August, the number of secondary homes sold at a loss increased in September, market sources said. At least 100 secondary properties changed hands below their purchase prices last month, up from around 81 in August.

While the overall residential market appeared resilient following the US Federal Reserve’s interest rate hike in September, with some agents projecting home prices could rise by as much as 15 percent by the end of the year compared with 2023, this positive outlook did not extend evenly across the secondary home segment.

Loss-making transactions were reported across Hong Kong Island, Kowloon, and the New Territories, affecting both luxury and mass-market properties. Reported losses ranged from 10 to 30 percent. Sai Kung, known as a luxury residential enclave, continued to see secondary sales at a deficit, particularly in high-end, low-density developments like Mount Pavilia, The Mediterranean, Hebe Villa, and Casa Bella.

Frankie Liu, sales director at Century 21 Goodwin Property, attributed many of the loss transactions in recent years to sellers emigrating or downsizing, which compelled owners to accept lower offers. For example, a high-floor flat at The Mediterranean measuring 695 square feet sold last week for HK$8.38 million. The owner had originally purchased it from the developer in April 2019 for HK$12.36 million, resulting in a paper loss of nearly HK$4 million, or about 32 percent.

Similarly, a detached house at Hebe Villa changed hands in late September for HK$21 million after a HK$4 million price cut. Purchased in 2009 for HK$25.88 million, the sale represented a loss of close to HK$4.9 million, approximately 19 percent.

Liu noted that Sai Kung’s expatriate community had been affected by ongoing US-China tensions and Hong Kong’s political unrest, leading many foreign residents to sell their properties and leave. Nevertheless, he observed a recent resurgence in expatriate buying activity in Sai Kung, with foreign buyers now accounting for more than 20 percent of purchases—up from a low of around 10 percent during 2020 and 2021, though still below pre-2019 levels.

Data from Hong Kong’s Rating and Valuation Department indicated a modest 0.2-point increase in the private residential property price index in August, reaching 320.5 points following a slight dip in July. However, the outlook in mass-market areas like Tuen Mun remains mixed. At least 13 secondary homes there were sold at a loss last month.

Among several transactions, a 428-square-foot mid-floor flat at Beneville sold for HK$4.6 million following a HK$250,000 price reduction, leading to a loss of HK$980,000 or 17.6 percent after a three-year holding period. Another property at Le Pont, measuring 737 square feet with a 775-square-foot garden, sold for HK$8.58 million, representing a loss of HK$3.37 million (28 percent) after eight years of ownership.

Kit Lam, senior associate director at Ricacorp Properties, said market uncertainty is driving owners to accept losses, though many mass-market homeowners tend to be reluctant sellers since they usually hold properties for self-occupation. This hesitance has contributed to a decline in secondary market transaction volumes from more than 100 deals in May and June to approximately 70 in September. Lam estimated that properties listed by owners willing to sell at a loss comprised about 15 percent of total listings.

Agents also reported that loss-making sales have extended to subsidized housing, indicating a broader impact across Hong Kong’s residential property market.