Hong Kong’s residential property market has seen a recent divergence as sales of new flats surge while transactions in the secondary market remain subdued. Industry observers attribute this split largely to developers aggressively reducing prices for new developments to clear stock ahead of anticipated interest rate hikes.
According to figures from Centaline Property, new home sales in Hong Kong more than doubled from July to September, rising by over 95 percent to approximately 1,500 units. The total value of these transactions increased by nearly 32 percent, reaching HK$20.88 billion. In contrast, the secondary market showed limited recovery, with used home sales dropping by 337 units to just over 3,000 in September, and the total transaction value declining by HK$2.31 billion to HK$24.76 billion.
Derek Chan Hoi-chiu, head of research at Ricacorp Properties, explained that the primary market’s stronger performance stems from developers pricing new projects at or below prevailing market rates. Combined with flexible payment schedules and mortgage incentives, these measures have diverted buyer interest away from the secondary market, where sellers have largely maintained firm asking prices.
Examples of this trend include The Sterling, a new project in Cheung Sha Wan by China Resources Land, which launched 102 flats in mid-August at an average price of HK$17,880 per square foot. All units sold out on their launch days. Comparable secondary homes in the nearby “four little dragons” estates—Liberte, The Pacifica, Banyan Garden, and Aqua Marine—are over 20 years old and trade at prices ranging between HK$16,600 and HK$17,400 per square foot, according to agents.
Investors such as one buyer surnamed Chan have shifted focus from these older estates to new developments like The Sterling, drawn by younger properties and greater potential for appreciation. “Prices of new homes are comparable to those of secondary properties, yet the new developments are 20 years younger and offer better investment potential,” he said, noting the advantage of developer incentives and financing options.
In North Point, the State Residence project developed by Chow Tai Fook launched 50 flats in mid-September at just over HK$20,600 per square foot, representing a 15 percent discount compared with other new and resale homes in the area. Nearly all of the 194 flats were sold within less than two weeks. Such pricing has contributed to a 25 percent decline in secondary market activity in North Point, according to Chris Wong, executive director at Century 21 Sunrise.
Similarly, Yuexiu Property’s first phase of The Atlas in Yau Tong offered 128 flats at HK$13,988 per square foot—the lowest for a new development in urban Kowloon in a decade. This price point has attracted buyers who previously considered smaller secondary homes in the New Territories priced between HK$3 million and HK$4 million. The initial batch of 200 flats at The Atlas sold out on launch day.
Analysts expect developers to maintain competitive pricing and attractive incentives in the near term as they seek to reduce inventory. Chan of Ricacorp Properties anticipates the primary market’s outperformance over the secondary sector to continue through October, with the price gap narrowing only after new stock is absorbed or secondary market sellers adjust their expectations.
In summary, the combination of discounting, mortgage incentives, and flexible payment terms has reshaped buyer preferences, driving a pronounced recovery in new home sales while the secondary market struggles to regain momentum.