Property sector faces worst crisis in 40 years

The city’s property sector is grappling with its worst downturn in four decades, as house prices plummet to levels not seen since 2012, according to the Association of Property Agents and Realty Developers of Macau.

In January, the average price per square meter dropped below 70,000 patacas, a significant decline from just over 86,000 patacas throughout 2023. “Real estate is in the worst environment in 40 years,” said Ung Choi Kun, head of the association, on the sidelines of an event earlier this week.

“Today, a decade later, prices are the same as they were back then. That’s more than 80,000 patacas per square foot. But in reality, if you put a house on the market now, its value has actually dropped by more than 50%, and no one is buying it.”

Although the number of transactions increased slightly last year to 3,057 autonomous units, it remains a stark contrast to the 2,913 deals recorded in 2023, the lowest figure since 2018.

The lackluster post-pandemic recovery has prompted the government to abolish tax incentives aimed at boosting home purchases, but these measures have yet to yield significant results.

Recent data from the Monetary Authority of Macau showed a nearly 18% decline in new mortgage applications in December.

Despite a 36.5% rise in new loan requests from October to December, banks are hesitant to lend, particularly for older properties, due to the declining market value of such homes.

“The old city has not undergone any major transformation,” Ung stated.

“We must explore ways to revitalize it. Supportive housing is crucial for those willing to invest, and the government should assist them in purchasing these properties.” He emphasized the importance of a comprehensive support network to facilitate urban renewal, which he views as essential for revitalizing the sector. Ung pointed out that urban renewal could benefit both the real estate and financial industries, noting a significant increase in non-performing loans, which rose from 0.3% in 2020 to 5.5% in November 2024.

Government statistics indicate that as of June 2024, over 32,000 homes in Macau were more than 40 years old, representing nearly 14% of the total housing stock.

Ung warned that without decisive action, the sector’s decline could have lasting repercussions on the city’s economy. Victoria Chan