HONG KONG: Ray Yuen waited for months for someone to buy his Hong Kong home so he could upgrade to a bigger one for his family. But there were barely any offers, and the ones he received were ridiculously low.

Then everything happened very quickly. Soon after financial secretary Paul Chan announced the removal of all extra property levies last week, Yuen’s 340 sq ft (32 sq m) apartment got a lot more viewings. By Saturday, he sold it with a small discount that he found acceptable. The next day, he signed the contract to buy another property.

“The market is much more active now,” said Yuen, who works in marketing. “We worried that the prices will bounce back later this year so we decided to buy as quickly as possible.”

Yuen’s experience epitomises the dramatic rebound in sales in Hong Kong’s residential market. Buyers who had been waiting on the sidelines, deterred by high borrowing costs, rushed in on the expectation that prices will rebound after the policy change.

Hong Kong’s new-home sales surged 10 times in the first five days after the government removed the cooling measures compared with two months ago, according to Midland Realty.

Henderson Land Development Co’s Belgravia Place project in Kowloon sold almost 200 apartments in a few hours on Thursday after applications were oversubscribed by 34 times.

The second-hand market is also picking up. The city’s 10 biggest estates saw transactions jump to the highest in more than a year over the weekend.

Foreign buyers and existing-home owners no longer have to pay the respective 15% and 7.5% levies on transactions. Instead, everyone is subject to the regular rate capped at 4.25%.

The urgency for some buyers to snap up homes is guided by past experiences with Hong Kong’s property market.

Back in 2009, Yuen offloaded a home but didn’t buy another, missing out on the start of a decade-long bull run that was driven by ultra-low interest rates. “I didn’t think prices could keep rising and rising,” he said. “I couldn’t keep up.” He eventually re-entered the market in 2013 with the purchase of a smaller apartment. So this time around, Yuen felt he had to act fast.

Locals familiar with the market aren’t the only eager buyers. Demand is also coming from non-residents, now that they are no longer subject to additional taxes.

For mainland Chinese in particular, Hong Kong is now an attractive place to invest in properties given that other overseas cities charge foreign buyers steeper taxes, said Bryan Lai, an agent with Centaline Property Agency Ltd in the Sheung Shui area close to Shenzhen.

Lai brokered a purchase for a mainland client last weekend. “She was very excited when I told her about the news” that the curbs were removed, he said. “She visited the apartment on Sunday afternoon and by evening the same day, she decided to buy.”

The client is currently renting in the area and finds the lower tax rate a compelling reason to buy, said Lai. The unit was sold at a discount of 13% to the asking price.

The real estate crisis in mainland China has also made Hong Kong’s market seem like a safer bet.

“I have a relatively positive outlook on Hong Kong’s property market,” said Daisy Li from Shenzhen who has applied for the city’s talent programme and is planning to work in Hong Kong. “It’s not that I’m expecting the value to appreciate, but rather for the purpose of preserving value, especially when property prices in Shenzhen have fallen so much.”

Li was one of the more than 7,300 buyers who registered to purchase the 208 units available for sale at Henderson’s Belgravia Place on Thursday.

Still, analysts are less optimistic than buyers that home values will rebound anytime soon.

“Although the recent relaxation of property-cooling measures may stimulate demand, high interest rates and abundant near-term supply will cloud the recovery of Hong Kong’s home prices,” S&P Global Ratings credit analyst Wilson Ling wrote on Wednesday.

Average mortgage rates hit almost 4% in November, compared with less than 2% in mid-2022, data from mReferral Mortgage Brokerage Services show. There is a potential new-home supply of 109,000 units, according to Jones Lang LaSalle.

Supply in the secondary home market is also expected to rise, after the government scrapped a duty on sellers who offload their properties within two years, further weighing on the market.

But to some, now is a good time to buy.

“People are in a rush,” said Yuen. “The fact that home prices have fallen so much from the peak has presented an opportunity to enter the market.”