Three major obstacles hinder the recovery of the property market

Damon Ho

11/1/2025

Since the new year has been coming, property developers cannot wait any longer, especially small developers, they are the first to launch new projects for sale recently. Their aim is to increase the sales of its new projects rather than allow these stocks to be idle. As the first market mover, it helps them to absorb the scarce buyers before the big developers take full advantage of the opportunity to launch new projects after the Lunar New Year holiday.

In fact, small developers are very worried. If they follow the big developers’sales strategy in the past and only launch projects after the Lunar New Year holiday, it is likely that they may not be able to attract enough customers while the buyers’market is still prevailing. Due to this dire situation, the first market mover may gain some scarce customers, which is better than the market followers facing a more stringent market without sufficient customers.

In order to avoid losing the opportunity, individual big developers also followed the small developers to launch their projects either. The other large developers still hope to launch new projects during the Lunar New Year holiday after Trump takes office. They are uncertain and want to observe the impact of Trump's tax plan on the local real estate market so that they can better regulate the pricing and sales strategy of first-hand properties.

At the beginning of 2025, the real estate market faces three major obstacles. The first is Trump's tax plan, which has already forced the Renminbi (RMB) to depreciate by about 5% since the last quarter. If this trend is unchanged, the RMB will depreciate another 5% in the next few months. The 10% depreciation of RMB will reduce the mainlanders’ desire to buy properties and lower their consumption in Hong Kong. As a result, there will be fewer buyers in the first-hand property market and the rental of shops will also fall.

Additionally, there are eighty-five new projects and 70,000 residential units, which are available for sale. Last year, there were only 16,000 new units sold due to the interest rate cut and the withdrawal of all the spicy measures against the property market. It is hard to find any similar good news this year. Thus, it is better than expected if the sales transactions of the first-hand properties reach 13,000 units this year.

In terms of interest rate trends, as the United States raises taxes on various countries, inflation will reemerge after the mid of this year. If it happens, the United States will not only stop to cut interest rates, but they may inversely raise interest rates in the opposite direction. In this situation, Hong Kong will have to follow suit due to the linked exchange rate with US dollar. The interest rates hike will deter the property market to bottom out.

It is difficult for the property market to perform well under these three obstacles. Indeed, it is already insignificant to predict how much the property price will fall this year. What is going to happen will eventually come.

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