JLL: Global economic slowdown weighs on SAR’s property market

Macau’s property market is being affected by interest rate hikes, global economic slowdown and mainland China’s slowing economic recovery.

In its 2023 GBA Residential Market Update, realtor JLL said investors continue to adopt a wait-and-see attitude toward the real estate market.

Residential market transaction volumes climbed 10.1% y-o-y to 2,383 as of September, according to data from the Financial Services Bureau (DSF).

Only 50 pre-sale transactions were recorded in the first three quarters due to the absence of major residential projects, and the transaction value of pre-sale projects accounted for only 2.1% of the overall residential transaction volume.

In its update, JLL recalled the government had increased the rates of land premiums in May, which sharply reduced developers’ profits, and would consequently affect the land market.

In August, the government also launched two development sites in Taipa central district for auction, but only one site received a tender.

Meanwhile, the realtor said 11 Greater Bay Area (GBA) cities had witnessed uneven recovery in the housing market after the relaxation of cooling measures earlier this year.

According to JLL’s 2023 Greater Bay Area Residential Guide, the GBA mainland cities had seen a mild and uneven recovery in housing markets, while Hong Kong’s residential market remains subdued.

Home sales in Macau rebounded, but prices continue to fall.

According to the realtor, the falling prices show that the housing market recovery remained slow and GBA housing prices are expected to remain under downward pressure in 2024.

Oliver Tong, general manager of JLL Macau, indicated that “Macau implemented adjustments to the property market in November, including stamp duty exemptions and relaxed mortgage loan-to-value ratios for luxury homes, which will help improve the sentiment in the luxury property market.”

The local government has already announced it will remove 5% stamp duty on residents’ purchase of a second home.

However, home buyers will face lower mortgage loan offerings.

“Starting next year, buyers purchasing residential properties below MOP8 million will need to undergo the loan affordability stress test set by the Monetary Authority of Macao, with borrowers able to obtain a mortgage loan that covers up to 70% of the property value, which is lower than the existing 90% or 80% mortgage loan options,” he added, as cited in the report.

Previously, the realty agency had called on the government to drop some of the existing market-cooling measures to help with economic revival.

The call was based on the assumption that in the second half of this year, real property prices in Macau would see an average drop of 5% from the level that is already 10% short of the historical high.