It was Hong Kong’s third straight monthly rise, as buyers’ confidence was lifted by the stable funding costs and the government’s migration programme, which allows eligible persons to pursue residency in Hong Kong through capital investment in the form of financial assets.

“Interest rates have peaked and the impact on the property market will further be reflected in the registration of property deals at the end of February and March,” said Yeung Ming-yee, senior associate director at Centaline Property Agency.

“It shows that interest rates have peaked and in anticipation of interest rate cuts, some buyers have taken advantage of the low price to enter the market and second-hand transactions have returned to the 2,000 level,” he added.

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“The overall property market transaction volume returned to the level of more than 4,000 transactions,” said Yeung. “The number of property deals in January was also the highest in five months since the 4,660 deals recorded in August.”

On Thursday, HSBC, Hong Kong’s biggest lender, said it was keeping its prime rate unchanged at 5.875 per cent, while deposit rates were kept steady at 0.875 per cent per annum. Hang Seng Bank also kept its rates steady.

HSBC’s decision followed that of the Hong Kong Monetary Authority (HKMA), which left the city’s base rate at 5.75 per cent, hours after the Federal Reserve kept its target range at 5.25 to 5.5 per cent in the first policy decision of the year. The pause, the fifth since the world’s most powerful central bank began raising the cost of money in March 2022, was in line with market expectations.

Meanwhile, the CIES would continue to benefit the sector, experts say. This scheme will drive portfolio diversification and ultimately boost deal volumes in the overall commercial market, according to property consultancy Colliers.

Despite the improvement in property sales, volumes have remained at a “very low level”, said Martin Wong, director and head of research and consultancy for Greater China at Knight Frank.

In the first half of 2023, total monthly property deals in Hong Kong ranged between 4,427 and 8,599 units.

“The overall purchasing power of the market is still seriously insufficient,” Wong said. “It is expected that the primary and second-hand home transaction volume this year will be around 48,000 to 53,000 units.”

Prices are also expected to remain soft as unsold inventory remains high, according to Midland Realty.

In the last quarter of 2023, the number of unsold flats rose to 20,000 units, representing a quarter-on-quarter increase of 2,000 units and hitting levels not seen since records began 20 years ago, data released by Housing Bureau on Friday showed.

The supply of first-hand private residential flats available for sale in Hong Kong, in the next three to four years is projected to rise to 109,000 units.

“Primary sales are still not very satisfactory,” said Buggle Lau Ka-fai, chief strategist at Midland Realty, a leading real estate agency. “The sales rate of brand new flats launched last year fell below the 50 per cent level, which is significantly lower than the sales rate of about 70 per cent in 2020. The number of first-hand transactions last year was only about 10,500, which is the second lowest in 10 years.”

In 2023, a total of 58,035 properties changed hands in the city, a 2.7 per cent drop compared with 2022 and the lowest figure since 1991, according to official data. The total value of transactions plunged 13.8 per cent year on year to a 10-year low of HK$477.9 billion, government data showed.