Analysts suggest that recent reductions in stamp duties for residential properties valued under $4 million in Hong Kong may not significantly increase property prices due to a sustained oversupply. Instead, these measures could gradually enhance market sentiment and stabilize the real estate landscape. Despite an uptick in transactions following tax cuts, experts highlight that developers are maintaining rather than raising prices amid forecasts of approximately 108,000 new private homes entering the market over the next few years.

Lower taxes might improve affordability for entry-level buyers but are unlikely to cause a major shift in the market dynamics. The impact is expected to be gradual, with increased activity potentially contributing to market stabilization. Although transaction volumes are predicted to rise, price levels are anticipated to remain subdued in the short term due to substantial housing supply.

Persisting Oversupply and Transaction Trends

Despite adjustments in stamp duties, the continued influx of new housing units into the market exerts pressure on developers to maintain competitive pricing strategies. This scenario has led to a notable increase in transaction volumes without a corresponding surge in property values.

According to industry insights, the government's decision to reduce ad valorem duty thresholds has spurred a 33% rise in transactions in March compared to the previous month. However, this growth is attributed more to developers' aggressive marketing tactics and price cuts rather than solely the tax changes. Analysts emphasize that while properties below $4 million have seen increased sales, higher-priced units continue to dominate the market, accounting for over 70% of transactions in March. Furthermore, projects like Vanke Le Mont in Tai Po, Sun Hung Kai’s YOHO West Parkside, and Kerry Properties’ The HAVA have capitalized on the tax cuts, showcasing a strategic approach to leveraging reduced costs to stimulate sales.

Market Sentiment and Future Outlook

The revised tax policies aim to bolster buyer confidence and foster a sense of stability within Hong Kong's real estate sector. Analysts foresee a positive yet measured influence on overall market activity.

Experts predict that the lower tax thresholds will gradually enhance market sentiment, particularly benefiting entry-level buyers by making home ownership more accessible. Although immediate price fluctuations are unlikely, the broader implications point towards enhanced transaction volumes across all property segments. Lucia Leung from Knight Frank anticipates a 5% to 10% rise in transactions for flats priced under $4 million over the next six to twelve months. Additionally, if interest rates continue to decline and new projects are actively launched, market momentum, especially for affordable housing, is expected to strengthen. Elliott Hau from Colliers Hong Kong underscores that despite short-term price suppression due to significant supply, long-term stabilization and increased activity are likely outcomes of the current policy adjustments.