Sammy Po Siu-ming (left), CEO of Midland Realty's residential division for Hong Kong and Macao, and the real estate brokerage firm's chief analyst Buggle Lau Ka-fai attend the press conference on the agency's forecast for Hong Kong's property market in the second half of 2023 on Aug 8, 2023. (OSWALD CHAN / CHINA DAILY)

Midland Realty has slashed its forecast for this year’s home prices and property transaction deals as Hong Kong’s property market rebound has not been as strong as anticipated.

The city’s listed property services brokerage firm revised downward its forecast for the city’s home price growth to about 5 percent for the full year of 2023, from its original forecast of 10-15 percent made early this year.

For the secondary home market, the real estate agency predicted 40,000 secondary home transactions with a total consideration of HK$305 billion this year, down 20 percent and 25.6 percent respectively from its original forecast

In the firsthand sales market, Midland Realty estimated there would only be 14,000 transaction deals with a total consideration of HK$156 billion ($20 billion) for this year, representing a downward revision of 12.5 percent and nearly 18 percent respectively from its original forecast.

READ MORE: JLL: HK's residential market 'has not found a bottom'

For the secondary home market, the real estate agency predicted 40,000 secondary home transactions with a total consideration of HK$305 billion this year, down 20 percent and 25.6 percent respectively from its original forecast.

Buggle Lau Ka-fai, chief analyst of Midland Realty, listed three “not-as-expected” factors that will continue to dampen the city’s property market in the second half of this year.

Previously it was expected that Hong Kong’s property market would benefit from the canceling of stringent anti-COVID measures and the re-opening of the border between the Hong Kong Special Administrative Region and the Chinese mainland, leading to a strong rebound in the city’s economy.

However, Lau argued that Hong Kong’s economic growth rate for the second quarter has slowed down while interest rates may still rise by the end of this year.

“The prices of firsthand flats were 6.7 percent cheaper than residential homes in the secondary market last month. And the discount rate may extend to 10 percent in the third quarter, which will be the largest discount ratio since data has been compiled (from) 2005, and this will (put) pressure on the secondary home market in the remainder of the year,” the chief analyst cautioned.  

CK Asset Holding, the property flagship of Hong Kong billionaire Li Ka-shing, has stunned the market by offering firsthand residential flats in its residential flat project, Coast Line II in Yau Tong, for around 20 percent cheaper than the most recent luxury flat launches in the neighboring Lam Tin neighborhood.

This has induced Hong Kong homebuyers to snap up the new flats at Coast Line II for the lowest prices the city has seen in seven years.

READ MORE: Housing market to dip further as Fed raises rates, experts say

Sammy Po Siu-ming, CEO of Midland Realty’s residential division for Hong Kong and Macao, suggested that the HKSAR government should withdraw some or even all of the cooling measures introduced since 2010. 

“Measures such as relaxing the stress test requirement, scrapping the ‘pay the 30 percent stamp duty first, refund later’ arrangement for overseas buyers, and abolishing the Special Stamp Duty and Buyer’s Stamp Duty, can be considered,” Po said.

He added that implementing these suggestions would help more expatriates to settle in the city, while also increasing the supply of lettable residential flats.