Merry Homes

Regardless of the ups and downs in the short run, the housing market is expected to remain stable and continue its recovery in 2021 in the wake of one of the worst years in terms of home transactions over the COVID-19 pandemic. 

The performance of the local housing market over the past year amid the COVID-19 pandemic is a testament to the financial power of homeowners and homebuyers in the city, with the average transaction value still hovering at a high level in spite of the gloomy economic prospect. As 2020 nears its end, analysts and industry insiders say the residential market generally continues to be recovering despite uncertainties persisting in the short run.  

Latest data from the Financial Service Bureau (DSF) show the average home price in the city stood at MOP 106,836 (US $13,354.5) per square metre in November, down by 4.2 percent year-on-year. In the first 11 months of 2020, the price averaged MOP 101,304.6 per square metre, down by 7.1 per cent from the annual price observed in 2019. In spite of the decline, should the average home price remain unchanged in December the annual price in 2020 would still be the third highest annual value on record, following 2018 and 2019 levels. 

In terms of sales, the number of home transactions totalled 5,379 in the first 11 months of 2020, down by 26.2 per cent year-on-year, DSF data said. And 2020 is likely to become the year with the second-lowest number of home sales since the handover, just slightly higher than the 5,744 transactions recorded in 2015. 

“[Last year] was definitely the worst year for the housing market since the global financial crisis [in 2008-2009],” says Jane Liu Zee Ka, managing director of Ricacorp (Macau) Properties Ltd. “Compared to the last time the home price dropped significantly, while less so for the sales volume, the situation completely reversed this time with considerable contraction in the number of transactions but only a slight adjustment in the home price.” 

“When the economy is stable, people will be more active in home purchase, a concept that is deeply rooted in the Chinese mindset. The number of home transactions [in 2021] will be at least 20-30 percent more than [in 2020],” says Jane Liu of Ricacorp Macau 

These days, homebuyers and homeowners are “more conservative” and adopt a “wait-and-see” approach due to the coronavirus outbreak that has been persisting for over a year now, she says. “Before the pandemic, all the new flats would be snatched after the sales campaign was launched, but now developers have to come up with different incentives and packages to entice buyers,” she adds. “For instance, some developers now sell a parking space within the same project for MOP 1.4 million, half the price it had before.” 

But Ms. Liu is sanguine towards the market prospect for this year, as there have been signs of an economic recovery following the gradual lifting of travel restrictions and the imminent roll out of the COVID-19 vaccines. “Once the pandemic is under control globally [in 2021], and the situation is considered stable in Macau and Mainland China, the economy will regain momentum,” she previews. “When the economy is stable again, people will be more active in their home purchases, a concept that is deeply rooted in the Chinesemindset. The number of home transactions [in 2021] will be at least 20-30 per cent higher [than in 2020].” 

“There is no oversupply of homes here but rather undersupply… alongside with the high income level of Macau residents… I don’t see any huge downward pressure upon the market, which has pretty much digested the bad news induced by COVID-19,” says Chong Sio Kin, president of the Macau General Association of Real Estate. 

Mainland reliance 

The gross domestic product (GDP) of the city dropped by 59.8 percent in the first three quarters of 2020, but authorities expect that the economy could achieve “a double-digit annual growth” this year, should the pandemic situation in Macau and neighbouring regions get under control. The Macau Association of Economic Sciences also noted in its latest quarterly local economic climate report that major economic indicators of the city — including gaming revenue, number of visitors, and hotel occupancy rate — “have significantly improved” in the last quarter of 2020, expecting the economic recovery to accelerate from the second quarter of next year.  

Chong Sio Kin, president of the Macau General Association of Real Estate, also believes the Macau property market will remain stable this year and beyond. “Judging from the impact of the pandemic [upon the local market], the financial power of Macau homeowners is relatively strong,” he says. “There is no oversupply of homes here, rather an undersupply… because of this, and considering the high income level of Macau residents… I don’t see any huge downward pressure upon the market, which has pretty much digested the bad news induced by COVID-19.” 

Though the annual number of visitors to Macau could fall below 6 millions in 2020 — about half of the volume recorded in January before the pandemic hit — in a stark contrast with the 39.4 millions who came in 2019, the local administration expects the volume to rebound to over 14 millions this year. “The main economic pillar of Macau is the gaming industry, which has to rely on the mainland market, so the mainland Chinese economy and the mainlanders’ willingness to visit Macau will be key in determining the performance of the local economy and the property market,” Mr Chong adds.  

Lily Hong, sales director of Midland Realty (Macau) Ltd, also points out: “Real estate investors have definitely been less confident and risk-taking in the past year due to the pandemic, but they still have strong liquidity because there have not been many cases of drastic cuts being performed on home prices.” While the government data suggests that first-time resident buyers have still dominated the market this year, accounting for over 80 per cent of home transactions in the past 12 months, Hong says more home upgraders have come out to look for the best deals in spite of the pandemic, a trend that she expects will continue in 2021. “Home upgraders account for at least 30-40 per cent of the transactions our firm handled [in 2020], at least 20 percentage points more than in the previous year,” she adds. 

With the gradual economic recovery expected for this year and the overall lack of housing supply in the market, there might even be room for a slight hike in home prices. “There have been talks for years about the shortage of first-hand supply in the short-medium term, and developers might also only roll out their stock little by little,” Ms Hong says. “Thus, there is limited room for home prices to go down first, then possibly a small rise [in 2021].” 

“Home upgraders at least account for some 30-40 percent of the transactions our firm handled [in 2020], at least 20 percentage points more than the previous year,” says Lily Hong of Midland Macau 


But the government-appointed legislator and president of the Macau Association of Economic Sciences, Joey Lao Chi Ngai, has a different view. “Although the authorities have not carried out any land auction for many years, affecting the supply of private homes, [it’s not true] there is no private housing supply here at the moment,” he says. “The problem is that the price of private housing is beyond the affordability of many residents.” 

In consideration of the latest Policy Address and the recent remarks made by government officials like Chief Executive Ho Iat Seng, the lawmaker says the official stance on the private home market is that it is stable, as “any significant fall in the private home market might cause social and systematic financial problems.”  

“The government overall wants the market to remain stable without any huge rise or fall, while it tries to help resolve the housing problems of residents through different types of public housing,” the scholar continues, adding there is still pressure on the housing market in the short term, though. “The economy is still plagued with uncertainties, affecting local employment and the income level of residents, which might take time to reflect on home prices.” 

“The government overall wants the market to remain stable without any huge rise or decline, while it tries to help resolve the housing problems of residents through different types of public housing,” says legislator-cum-scholar Joey Lao 

Rental trauma 

The overall unemployment rate in the territory stood at 2.9 per cent between August-October 2020, the highest level in more than a decade, while the unemployment rate of residents during the same period stood at 4.1 per cent, up from the 2.3 per cent recorded at the end of 2019, latest government figures show. The residents’ median monthly earnings hit MOP 18,300 in the third quarter of 2020, down by 8.5 per cent quarter-to-quarter, the data shows.  

In addition, according to the Labour Affairs Bureau, the number of non-resident workers totalled 181,631 as of October 2020, down by 6.1 percent or over 11,860 from January 2020, before the onset of the pandemic. The number of non-resident workers in the hotel, food and beverage, gaming, and entertainment sectors further dropped by 13.5 per cent over the same period to 61,037 in October 2020.  

This employment situation has put a damper on the residential rental market, which usually relies on imported labourers. “The number of home rentals in the neighbourhoods that rely on residents as well as on imported employees has just gone down slightly amid the pandemic, but rent in some high-end residential districts that rely on non-resident personnel working at a management level and gaming workers has undergone a significant change,” Ms Hong of Midland Macau says, adding that rent prices for luxury residential complexes have decreased by 30 per cent in some cases. “Some landlords would also rather let their properties stay vacant instead of leasing them at a lower price given the fact that most of them have ample liquidity.” 

Ms. Liu of Ricacorp Macau also acknowledges that the residential rental market will continue to perform poorly for at least some time next year. “There have been pieces of news about non-resident employees working across various fields being made redundant in the recent weeks, so it will definitely take some time after the return of non-local workers for the rental market to get back to its pre-pandemic level,” she notes.