Mainland China’s money is pouring into Hong Kong’s property market, especially luxury homes, as analysts expect a slow recovery.

In the pre-pandemic year of 2019, buyers from mainland China backgrounds accounted for 8.4 percent of all home sales in Hong Kong, according to Midland Realty. Purchasing via mainland China peaked in 2011 at 11 percent of all homes, or 30.2 percent of new homes.

Annual transactions for buyers who were not permanent residents of Hong Kong or businesses dropped about 76 percent during the pandemic, according to Inland Revenue Department statistics cited by Midland Realty.

This depends on how many instances you are responsible for paying buyer’s stamp duty, which only applies to those buyers. There were 2,311 such deals from 2020 to November 2022, or about 770 per year. In contrast, there were 9,484 deals from 2017 to 2019, or about 3,160 deals per year.

In other words, closing borders cost the market about 2,400 deals a year, or 7,200 deals over three years, according to Midland.

Now, developers and agents are hoping buyers from across the border will give the market a good shot after total residential transactions in 2022 fell 39.4 percent year-on-year to 45,050, the lowest level since record-keeping began in 1997, according to the Register. Earth.

However, industry watchers also know that recovery will take time.

“Although reopening borders is a really powerful medicine for weak market sentiment and poor market conditions, Hong Kong has been like a sick person for more than three years,” said Tony Wan, director of sales and marketing for Hong Kong real estate at K Wah. international.

Wan said the importance of reopening borders is more about stimulating cross-border economic activity and improving the economy, after which people will be more interested in buying homes.

Wan said the city needs to do more to promote economic health, including measures outlined in Chief Executive Jun Lee Ka-chiu’s letter to attract talent, investors, venture capital and technology to Hong Kong. “It takes time to recover,” he added. “There is no miracle.”

One of the positive signs in the real estate market right now is the purchase by Hong Kongers who have recently obtained permanent residence. Mortgage applications by this group accounted for 11.4 percent of those handled by mReferral Mortgage Brokerage Services in the fourth quarter, the highest percentage since records began in 2018.

the government High quality immigrant admission system It seeks to attract highly skilled or talented people to settle in Hong Kong to enhance the city’s economic competitiveness. While the policy saw a Inquiries increaseIt is unclear to what extent the immigration of mainland Chinese will help the real estate market.

“Some mainlanders are still interested in investing or moving to Hong Kong because it is China’s window to the rest of the world, especially with the lure of its high-quality immigrant admission system,” said Andy Lee, CEO of China property agency Centaline Property. . “They might come and buy a house afterward.”

However, a boom is unlikely in the short term due to the high cost of home purchases and capital transfers, Lee added.

“Neither I nor my family have any plan to buy a house in Hong Kong,” said Ivy Chen, 26, an online fashion influencer based in Guangzhou with family businesses in several major cities in China.

“The reasons are clear. It is not comfortable to live. Houses in Hong Kong are very expensive but the area is very small compared to other big cities on the mainland. It is also not a good choice to put your money into the real estate sector instead of other sectors amid a bleak market.”

While the reopening of the China-Hong Kong border is expected to stimulate Hong Kong’s economy, higher interest rates will continue to cast a shadow over the mass housing market, according to Dorothy Chow, executive director of appraisal and advisory services at Colliers Asia.

She said, “With the recovery of the economy, we hope that the positive factors in strengthening residential real estate prices, including the performance of the stock market, the increase in household income, and the restoration of investor confidence will lead to the return of the residential market to the path of recovery.” “While further interest rate increases will continue to weigh on home prices, we expect an overall downward revision of 5 to 10 percent year-on-year in 2023.”