Hong Kong housing rally faces test as property flippers retreat

Hong Kong's housing market is experiencing a new challenge as property flippers and short-term investors are retreating, impacting the recovery. Despite secondary home prices continuing to rise, with the Centaline leading index hitting its highest level in three years, the number of transactions involving homes held for less than a year has plummeted by 24 per cent.

This shift indicates that the gains from the initial recovery phase are proving harder to replicate through rapid trades. Louis Chan, a key figure in Hong Kong's residential division, noted that buyers are now more cautious due to changing interest rate expectations and that developers are launching new projects at prices similar to those in the secondary market.

This has attracted buyers to first-hand homes, causing a slowdown in speculative activity. Alvin Leung, a senior director at Colliers Hong Kong, views the decline in speculative trading as selective rather than widespread. He pointed out that residential prices are still increasing, even as the volume of quick-flip transactions decreases.

The remaining speculative activity is largely concentrated in more affordable homes, with 474 of the 922 recorded short-term transactions involving properties bought for under HK$4 million. The average profit on these deals stood at about HK$520,000 in July. Notable examples include a 1,288-square-foot flat in Pok Fu Lam that sold for HK$37.18 million after being purchased for HK$29.8 million in October, and a 293-square-foot flat in Sham Shui Po that saw a 60 per cent gain of HK$1.24 million in about 306 days.

Conversely, only 43 of the 922 short-term transactions involved homes purchased for more than HK$10 million.