The wave of price reductions in the Hong Kong property market continues. The latest value released by the Central Plains City Leading Index CCL, which tracks Hong Kong property prices, hit a nearly seven-year low. The latest research report also shows that Hong Kong’s real estate market transaction volume in 2023 will hit a 33-year low.

At the same time, Guangzhou, Shenzhen, Dongguan and other Pearl River Delta cities located in the Greater Bay Area have experienced a rare net decrease in population since last year. Some analysts believe that this means there is an economic problem in the Pearl River Delta. The myth that Hong Kong’s property market will not fall has long been shattered, and the Pearl River Delta region will also be affected.

Property prices fell to a nearly 7-year low, and overall building transaction volume hit a 33-year low
The Central Plains City Leading Index CCL, which tracks Hong Kong property prices, announced its latest value of 147.21 points on January 5. As of December 31, 2023, the weekly index fell 0.93%, falling for 7 consecutive weeks and hitting a low in nearly 7 years; The index fell 2.32% month-on-month and 17.10% since the outbreak (since January 26, 2020), while the cumulative decline in three years was 16.46%. Large-scale and small- and medium-sized units recorded a weekly decrease of 0.16% and 1.10% respectively, and a cumulative decrease of 11.80% and 17.38% in three years.

On January 4, 2024, Centaline Real Estate released a research report stating that the number of Hong Kong real estate market transactions in 2023 hit a 33-year low, reflecting a severe decline in the property market.

The research report shows that the number of overall building sales contract registrations (including residential, parking spaces and industrial and commercial properties) in 2023 is 58,023, which is the lowest level since Centaline Real Estate began to have Hong Kong data in 1991, and the transaction value hit a 10-year high since 2013. A new low in the year; the sales volume of first-hand housing hit a 10-year low throughout the year, and the sales volume of second-hand housing hit a 28-year low.

Yang Mingyi, senior co-director of Centaline Real Estate Research Department, said that the data reflects rising interest rates and a slowdown in the local economy in 2023, which will affect the weak property market transactions. Outside public opinion believes that Hong Kong’s real estate market is expected to remain restricted in 2024 amid a gloomy economic environment and uncertainty about interest rate adjustments.

On January 5, Morgan Stanley published a research report on the Hong Kong real estate industry, stating that in the second half of 2023, high interest rates and weak macroeconomics caused the Hong Kong property market to slow down. This situation is expected to continue in 2024, and it is estimated that in 2024 Residential property prices fell by 10%, retail rents rose by 3%, and office rents fell by 5%.

In addition, in terms of real estate mortgages, the latest data from the Meridian Mortgage Referral Research Department and the Land Registry show that the number of real estate mortgages in Hong Kong has dropped to a low in more than 20 years.

According to the report, the number of existing mortgage cases in 2023 was 73,906, a decrease of 9,515 cases or 11.4% compared with 83,421 cases in 2022, a 23-year low since records began in 2001. The number of mortgages for off-the-plan properties throughout the year was 1,581, a record low for the whole year since 2005.

Cao Deming, chief vice president of Meridian Mortgage Referral, said that Hong Kong’s economy has not fully recovered in 2023. Coupled with the haze of interest rate hikes, developers have been hindered in launching projects, and the market performance of second-hand houses (second-hand houses) has been weak, thus affecting the mortgage figures of existing and uncompleted properties. .

Ji Da, a senior political commentator, told The Epoch Times that Hong Kong’s real estate transactions fell below the historical record today after 33 years. Coupled with the continued wave of price reductions in the Hong Kong property market, property prices recently hit a seven-year low, “obviously indicating that the Hong Kong property market will not fall. The myth has long since been shattered.”

Net population decrease in Shenzhen and economic problems in Pearl River Delta
Since the CCP launched the Guangdong-Hong Kong-Macao Greater Bay Area initiative in 2014, the Hong Kong SAR government has attached great importance to the Greater Bay Area and plans to develop it into a technology zone comparable to Silicon Valley and Tokyo Bay. However, as Hong Kong’s property market falls, the Hong Kong government cooperates with the CCP’s Greater Bay Area – major cities in the Pearl River Delta, including Guangzhou, Shenzhen, and Dongguan, have experienced a net population decrease since 2023.

Chen Qin, chief economist of China Maize Technology and deputy director of the Digital China Research Institute of the Mainland National Information Center, published an article on December 29, 2023 analyzing the population mobility of China’s major cities in 2023, saying that Shanghai, Dongguan, Chengdu, The inflow of people in Shenzhen, Suzhou and other places after the Chinese New Year in 2023 is far lower than the outflow of people before the Chinese New Year, and they have all experienced a net decrease in population.

It is worth noting that in 2021, cities with an outflow of people before the Chinese New Year will still have a net inflow of people after the Chinese New Year, creating a “hedge” for population mobility. However, in 2023, after the above-mentioned cities had a large net outflow of population before the Chinese New Year, they continued to outflow after the Chinese New Year. Among them, Shanghai and Shenzhen continued to outflow, especially Shenzhen.

Shi Shan, an expert on China issues, said that a net decrease in population in first-tier Chinese cities like Shenzhen means there are economic problems in the Yangtze River Delta and the Pearl River Delta, the two most economically developed regions in China. The Pearl River Delta is part of the Greater Bay Area.

Shi Shan said that taking Guangdong Province, the most economically developed province, as an example, before the so-called reform and opening up of the Chinese Communist Party in the 1980s, Guangdong Province had a population of more than 54 million. By 2021, the resident population has exceeded 126 million, and the population has more than doubled. More than the most populous provinces such as Henan and Sichuan.

“A large number of people from other provinces, especially wealthy people, have moved into Guangdong Province. This is a result of Guangdong’s economic explosion in the past few decades. However, there is now a net outflow of people from Guangdong Province. This shows that the population is closely related to the economic situation. There is an inextricable connection,” he said.

Chen Qin reached a similar conclusion after cross-analysis. He said that in the context of economic fluctuations and increasing employment uncertainty in first-tier cities, migrant workers have narrowed the radius of their search for employment and “flowed back to their hometowns or provincial capital cities closer to home. This reflects the population growth since 2023.” The main trends in flow.”

Chen Qin also said that the population of four first-tier cities will decrease at the same time in 2022, and multi-source data found that the outflow of population from some cities is still accelerating in 2023. This situation is extremely rare in the 45 years of the so-called reform and opening up.

Ji Da said that comparing the current situation of Hong Kong and the Greater Bay Area just shows that the entire economic leader and core is in Hong Kong. If there are problems in Hong Kong, the Greater Bay Area will not be immune.

“Hong Kong has been the leader in the Greater Bay Area in recent decades. The Pearl River Delta region of Guangdong has relied on Hong Kong in terms of corporate financing, technology transfer, etc. The continued decline of the Hong Kong property market is a sign that while Hong Kong is in decline, the Pearl River Delta region They will also be affected in the same way. It can be said that ‘one suffers and both suffers, one suffers and both prosper’,” she said.