AnalysisHong Kong property: how high rebates are helping developers lure more homebuyers amid a sluggish market

The property market in Hong Kong is experiencing a slowdown, leading to an increase in property agents offering substantial rebates to attract buyers. Samantha Sung, a 26-year-old homebuyer, benefited from this trend when she purchased a two-bedroom flat with the help of an agent from Midland Realty, who offered her a 70% rebate on his commission. She chose the agent who promised the highest rebate. The prevalence of high rebates is a sign of the challenging times in Hong Kong's real estate sector, with total property transactions expected to hit a 33-year low. The two dominant agencies, Midland and Centaline, are involved in the majority of property sales and are likely trying to boost their earnings through commissions. The Competition Commission has taken legal action against Midland Holdings for allegedly fixing sales commissions, which could affect property prices. The rebate system has been under scrutiny since the implementation of the Residential Properties (First-hand Sales) Ordinance in 2013, which regulates the sale of new properties. The ordinance requires detailed information to be provided to buyers, but some experts believe it has led to a reliance on rebates to adjust property prices, obscuring the true cost to buyers. Previously, buyers could negotiate directly with developers, but now agents facilitate price adjustments through rebates. While the ordinance has improved transparency, the rebate system may be distorting market information, potentially harming buyer interests.