Hong Kong’s property market regained some of its sparkle in January, with deals rising to a three-month high as the border with mainland China reopened and free travel resumed. This trend could continue into February.

The total number of property transactions – including deals for residential, commercial and industrial property and parking spaces – reached 4,427 last month, 24.2 per cent higher than the 3,565 transactions recorded in December, the latest data from the Land Registry shows. The total value of transactions also increased 25.6 per cent to about HK$32.5 billion (US$4.1 billion), a five-month high.

The property market’s upwards trajectory is expected to continue, given positive factors such as the border reopening and the stabilisation of interest rates, Centaline Property Agency said.

“With the gradual relaxation of [the Hong Kong] government’s anti-epidemic measures in December last year, as well as the slowdown in interest-rate hikes in the United States and [further] border reopening, and other positive factors, the atmosphere in the property market improved significantly during the Christmas period, stimulating an increase in transactions,” said Wong Leung-sing, a senior associate director of research at Centaline.

Beijing’s abandonment of its strict zero-Covid policy has given Hong Kong’s battered property industry hope for a gradual recovery. Easier travel between the mainland and Hong Kong is likely to boost property demand in the city, as buyers can now freely inspect units and traders can make plans for business expansion, analysts said.

Transactions are likely to rise in February as well, Wong said, after the US Federal Reserve delivered a much tempered rate hike of 0.25 per cent and Hong Kong’s banks kept their interest rates unchanged. “The news is positive and the boom will continue,” he added.

The Hong Kong dollar is pegged to the US dollar, which means that any movement in US interest rates triggers a corresponding action by the local monetary authority and banks in Hong Kong. Lenders in Hong Kong increased their prime rates three times in 2022 by a total of 62.5 basis points.

Of the total property transactions, 3,051 were for residential units, including sales of 2,470 lived-in homes in estates in areas such as Mei Foo Sun Chuen, Taikoo Shing and Sha Tin. In January, property developers launched several projects, including the third phase of Henderson Land Development’s One Innovale project in Fanling.

Property consultancy CBRE said 45,000 new flats could become available this year, following a record low 10,315 new home sales in 2022. This is likely to prompt developers to offer sweeteners such as agency fee rebates to potential homebuyers, the consultancy said.

The prices of lived-in homes in Hong Kong fell 15.6 per cent in December, according to data from the Rating and Valuation Department, ending 2022 with their biggest decline since the Asian financial crisis in 1998. This decline also confirmed that the segment’s bull run had come to an end after 13 years.

The city’s economy fell into a recession last year, with output shrinking at an annual rate of 3.3 per cent in the first nine months. Exports declined while local businesses slumped under one of the toughest Covid-19 curbs in the world. An exodus of expatriates also weakened demand and prices for homes in the city.