In the luxury segment prices fell marginally with volumes bearing the brunt of the downturn, while in the mass market volumes are being supported by an active primary sales pipeline.

• With many local investors more focused on capital preservation, and with overseas buying interest on the rise, luxury prices declined marginally across the board in the third quarter while volumes on Hong Kong island were hard hit.
• While recent social unrest and worsening economic conditions have cast a cloud over the housing market in general, mass residential volumes have held up well thanks to buoyant primary sales over the first eight months of the year.  The implementation of a vacancy tax by year-end should accelerate launches of backlog units as well as new projects, maintaining market momentum.
• The surprise rise in the LTV ceiling in government’s latest Policy Address may fuel short-term demand in the secondary market, while various measures to increase supply, including land resumption and the Land Sharing Pilot Scheme, remain long-term solutions to today’s housing problem.
• The impact of the trade war on businesses in Hong Kong and southern China, the threat of extradition and the subsequent social unrest have all rattled local investment sentiment, especially among HNWIs, and without any resolution we expect to see luxury volumes remain subdued to year-end but steep price discounting still seems unlikely.