The COVID-19 outbreak has undeniably put a strain on Hong Kong’s economy over the past few months. Given the situation, which has led to a severe shrinkage in primary market sales in the first quarter of 2020 compared to last year, developers have to restrategise and reset their plan for new development launches.

According to data from the Land Registry, in the first two months of this year, only 1,642 new homes have found buyers, almost a 60% decline year-on-year. In contrast, the outbreak has compelled homeowners to be more open to negotiate prices in the secondary market, resulting in an uptick in sales of pre-owned homes. Over January and February, the secondary market saw a total of 4,692 transactions, marking only a 2% decrease year-over-year. Centaline’s research department predicted that there will be a total of around 2,500 used home transactions in March, and that the number will be higher than those of the first two months in 2020 (official figures were not available at the time of printing). Overall, the first quarter’s sales seem to be largely unaffected.

The truth is, the secondary market was very much struggling at the beginning of the outbreak. Chinese New Year has traditionally been a low period for the housing market, and fears surrounding the development of the coronavirus epidemic exacerbated the situation as the public avoided going out, driving down sales even further. However, just when the home market appeared to have entered a phase of stagnation, an increasing number of homeowners started to offer their properties at discounted prices. Suddenly, we saw surreal scenes of mask-wearing prospective buyers queuing up to inspect properties. Louis Chan, Centaline Asia-Pacific Vice Chairman and Chief Executive Officer (Residential), explains that many homeowners are now willing to lower their asking prices by 3-5%, and this has attracted great attention from homeseekers who—with memories of the housing market plunge during the 2003 SARS crisis—wish to snap up a home before prices rebound after the outbreak.

Thanks to an increase in the number of discounted homes, the secondary market started to warm up in mid- to late-February. On February 23, Centaline Property and Midland Realty recorded the highest number of weekend transactions in the top 10 housing estates since last October. The two agencies also saw a 10% increase compared to the previous week in the number of people making an appointment to see units in these housing estates. In Hung Hom’s Whampoa Garden, former home of the city’s first death from the Coronavirus, the number of flat-viewing appointments surged by 60% week-on-week; while another large housing estate affected by the outbreak, Taikoo Shing in Quarry Bay, saw an increase of 20% in the same week.

Hong Kong’s secondary housing market has gone through a roller coaster ride in the first quarter of 2020. But despite the decent number of transactions, the average per-square-foot price has dipped. Sammy Po, Midland Realty’s Residential Division Chief Executive, believes that pre-owned homes offered at discounts will continue to dominate the market, and while it’s possible for home sales to rebound in the short-term, its long-term trajectory will have to depend on the development of the outbreak and the extent of price slashing activity.