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Cheryl Arcibal

Hong Kong’s lived-in home prices fell 0.46 per cent in July, halting a 13-month upswing, according to the latest official data.
The index tracking second-hand homes slipped to 321.5 in July from 323 in June, Rating and Valuation Department (RVD) data showed on Thursday.
It was the first decline in 16 months, following a drop in April last year. Prices were flat that May, then climbed steadily for 13 months starting in June.
“As residential property prices have increased by 7.3 per cent year to date, further upside is expected to be limited in the short term,” said Eddie Kwok, executive director for valuation and advisory services at CBRE Hong Kong. “The residential market is likely to enter a consolidation phase in the coming months.”
Since the trough in March last year, when prices had lost more than 28 per cent from their September 2021 peak, the index had recovered 13.37 per cent by June, data showed.
“Corrections in the Hong Kong stock market may affect investor sentiment, while controls on outbound investment from mainland China could reduce capital flows into Hong Kong’s property market,” Kwok said. “Taken together, these factors are expected to dampen investment demand.”
The decline comes as Beijing’s crackdown on offshore wealth stirs concerns about the potential impact of a 20 per cent personal income tax on certain returns earned by mainland residents from offshore assets, including Hong Kong insurance policies.
The biggest worry is the uncertainty about the degree of retroactivity of global taxation for individuals
Karl Chan, JPMorgan Chase
If it applied to property income, mainland demand for Hong Kong homes and commercial real estate assets could slow, analysts said.
Mainland buyers accounted for 29 per cent of home sales volumes and 37 per cent of value in Hong Kong, based on the frequency of pinyin surnames, according to JPMorgan Chase.
While most of these buyers were living in Hong Kong and had “genuine demand”, the biggest worry was the “uncertainty about the degree of retroactivity of global taxation for individuals,” which had implications beyond property-related taxes, said Karl Chan, head of Hong Kong property research at the US investment bank, in a report this week.
“Theoretically it includes all other types of income [for example, salaries] earned outside mainland China.”
Chan added that while there was “no explicit mention of retroactivity in the event of non-compliance”, the latest guidance required unpaid taxes on trust assets since January 2023 and trust income before 2026 to be settled within 90 days to avoid penalties.
“Thus, a three-year period seems to be the potential time frame,” Chan said, adding the exact implementation rules remained unclear.
A worst-case scenario of retroactivity covering 20 years could hit savings and cash flows of mainland Chinese individuals in Hong Kong, he said.


“Another concern is the lack of clarification or clear rules about mainland Chinese buying properties in Hong Kong. If there ends up to be some clarification, it could be a clearing event for investors,” Chan said.
If not, the overhang could persist, he added.
Joseph Tsang, chairman of JLL Hong Kong, said mainland buyers have recently been “one of the key sources of demand”.
Following Beijing’s announcement it would tighten tax enforcement on offshore assets, “some buyers have adopted a wait-and-see approach towards the property market while awaiting details of the measures,” he added. “This led to a decline in residential sales in June and July.”
Tsang said he expected the measures to continue weighing on home prices and transaction volumes in the short run. However, even if taxes were eventually imposed on purchases of overseas properties, this would primarily increase acquisition costs for mainland buyers.
“The market is expected to gradually absorb the impact of such policies, and their long-term effect on Hong Kong’s residential market is limited,” he said.
Tsang forecast mass-residential prices would rise 5 to 10 per cent this year, with most of the gains already realised in the first half. In the leasing market, rents were set to continue climbing, supported by demand from non-local students and returning expatriates.
Meanwhile, Hong Kong’s home rents set another high in July, rising by 0.77 per cent from June, according to RVD data.


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Housing rally stalls in July as tax risks curb demand, analysts say, raising doubts over market’s near-term outlook


Housing rally stalls in July as tax risks curb demand, analysts say, raising doubts over market’s near-term outlook.


Hong Kong home prices end 13-month upswing as tax fears weigh on demand

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Housing rally stalls in July as tax risks curb demand, analysts say, raising doubts over market’s near-term outlook

Housing rally stalls in July as tax risks curb demand, analysts say, raising doubts over market’s near-term outlook