JLL: Affordability of buying property in Hong Kong has significantly improved, with the price-to-income ratio falling back to 2012 levels at the end of last year.

On February 25, Jones Lang LaSalle (JLL) released the "Hong Kong Residential Sales Market Overview," which pointed out that the residential market in Hong Kong has undergone a significant adjustment over the past three years. With the decline in property prices, the affordability of real estate in Hong Kong has significantly improved. By the end of 2024, the ratio of property prices to income has decreased from 17.8 years in 2021 to 12.3 years, falling back to the level of 2012. This means that the period of income required for an average family to purchase a 538 square foot residential unit has been shortened by 5.5 years. The report mentioned that although the decline in property prices and increase in supply align with policy goals, market data reflect that the real estate development is facing two major crises: the number of units that can be started immediately on land approved in 2024 has plummeted by 33% compared to the previous year, with only 12,000 residential units available for construction. Additionally, land revenue for the first three quarters of the 2024/25 fiscal year has plunged to around HK$4 billion, much lower than the HK$13.9 billion in the previous year, and even less than one-eighth of the HK$33 billion target for the current year. Without appropriate policies, asset devaluation may lead to a vicious cycle, hindering the redevelopment and strategic planning of the urban area, and potentially threatening the foundation of long-term economic and social development in the northern metropolitan area of Hong Kong. Lee Yuen Fung, Senior Director of Project Strategy and Advisory at Jones Lang LaSalle (JLL), stated that to break the current market deadlock, the key lies in stimulating demand to address the problem of structural oversupply. JLL recommends the government to optimize the Capital Investor Entry Scheme, including fully recognizing residential investments by including all residential property investments in the HK$30 million investment threshold, and removing price restrictions on residential properties while abolishing the current requirement of a minimum valuation of HK$50 million for qualified residential properties. Chung Cho Yu, Senior Director of Research at Jones Lang LaSalle (JLL), pointed out that market participants may be concerned about the resurgence of speculation, but multiple structural factors have formed effective buffers against this. With 266,000 unsold units currently in existence, the market can help suppress rapid price increases. In addition, the long-term planning in the northern metropolitan area provides over 900,000 residential units, necessitating policies to stimulate demand to prevent oversupply issues. Furthermore, the affordability of real estate in Hong Kong has significantly improved, with the ratio of property prices to income falling back to the level of 2012. The market is currently undergoing a significant adjustment, and if asset prices continue to fall, risks such as shrinking household wealth, developers facing financial problems, and deterioration of fiscal stability could far outweigh the social benefits of a decline in property prices.