News release

Time to remove cooling measures in Hong Kong’s cold housing market: JLL

Average monthly home sales over the last nine months drop to lowest level in 20 years

October 12, 2022

Yvonne Liu

Public Relations Director, Marketing Communications Hong Kong
+852 2846 5264

HONG KONG, 12 October 2022 – The prolonged up-cycle of Hong Kong's residential market has started to reverse course as the average monthly residential sales transactions for the last nine months have dropped to the lowest level in 20 years and the mass residential prices have dropped over 7% year-to-date. JLL expects that housing prices will continue to trend lower and borrowers relying on high LTV mortgage are at risk of falling into negative equity. As such, the government should remove the cooling measures in the housing market as the market is no longer overheated.

In the first nine months of 2022, only an average of 4,100 flats per month changed hands, lower than the previous low of 4,200 transactions in 2013 when the government introduced the Double Stamp Duty. JLL's mass residential price index shows that home prices have dropped over 7% over the last nine months and are expected to drop 10% for the year. In the luxury residential market, only an average of 500 flats worth over HKD20 million sold per quarter in the first nine months of 2022, 55% less than the average of 1,100 deals in 2021 and about 40% lower than the average quarterly transactions in the last five years.

Joseph Tsang, Chairman of JLL in Hong Kong, said: "The down cycle in the housing market has just started and the market will continue to face headwinds. Although home prices are unlikely to fall off a cliff, the city will probably suffer a prolonged down cycle that we witnessed in 1999-2003 due to interest rate hikes, a reversal in liquidity, weakening global and regional economies, and geopolitical concerns. Housing prices dropped a cumulative total of about 50% during 1999 to 2003, or about 10% a year. We expect the prices of mass residential will extend the decline in 2023. If the cooling measures remain amid the backdrop of the global economic downturn and political turmoil, we will see a sharper price correction and rising cases of owners in negative equity. As such, it is high time the government started to consider removing the punitive stamp duties (Special Stamp Duty and Buyers' Stamp Duty) to help avoid negative equity becoming an issue in the city again. If the housing prices dropped further, developers are likely to be extra cautious in land bidding, which will affect land sale revenue as a result,"

He urged the government to remove the Buyer’s Stamp Duty to avoid developers slowing down their urban regeneration efforts amid the interest rate hikes. The government can also consider adjusting the levy of Special Stamp Duty only on vendors who had made gains when the flats are sold while freeing the loss makers from SSD liability.

Figures from the Inland Revenue Department show that the Buyers' Stamp Duty amounted to HKD410 million in the second quarter of 2022, the lowest quarterly receipt since the duty was levied in 2014. Doubled Ad Valorem Stamp Duty dropped to HKD1.33 billion, the second lowest following the lowest level recorded in the first quarter of 2022. The low levels of stamp duties receipt are signs of subdued sentiment among both investors and owner-occupiers.

Nelson Wong, Executive Director of Research at JLL in Hong Kong, said: "The housing market is no longer capable of quickly adjusting to changing market conditions due to the counter-cyclical measures. It is the primary reason residential sales have consistently stayed at low levels in recent years. Recent buyers who purchased new projects on plan and opted to take 90% LTV mortgages are most at risk as prices have dropped near 10% already. Further drop in prices means that these buyers may only be able to secure mortgages by putting more equity in the property. Others who already secured mortgages also find it hard to sell to limit loss given that they are subject to SSD. Negative equity cases are on the brink to spike should price falls beyond the 10% mark,”

Figures from HKMA show the number of negative equity cases remain low currently. However, this could change fast as demonstrated in 2016 where the number jumped from 0 to 1,432 in merely 6 months.

“The housing market is facing another round of price correction due to the weak domestic economic growth, population shrinkage, interest rate hikes and poor stock market performance. Residential prices are likely to mired in a down cycle as the economic outlook remains uncertain,” Wong added.  

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $19.4 billion, operations in over 80 countries and a global workforce of more than 102,000 as of June 30, 2022. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit