We maintain a conservative view on the recovery of the residential real estate sector in 2023 as we believe the sector will continue to face near-term headwinds in 2023 from relatively higher interest rates compared to 2020-2021 as well as subdued confidence from homebuyers. However, we have seen some positive developments for the real estate sector over the past few months in terms of regulations and interest rate movement, which support our view that the recovery of the sector could start in late 2023 — quicker than the previous property downcycle in 2008-2011 when it took two years for the sector to recover.

- Primary transactions are likely to decline further in Q2 2023 vs Q1 2023. We believe Q2 2023 transactions will remain muted due to the relatively high interest rate environment and oversupply of high-end products. However, we believe the number of transactions could start to pick up in late 2023, which is supported by our expectation for lower mortgage rates and positive changes in legal procedures following the Government’s actions.

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