Hong Kong Homes Prices Still Falling, Down 4.5% This Year

China’s economic slowdown and its deep property crisis has undermined confidence and created uncertainty in the real estate sector.

Prices of private homes in Hong Kong have continued to slide, dropping to the lowest level since February 2020, official data for July showed on Monday.

Home prices in the city – one of the world’s most unaffordable housing markets – eased 1.6% last month from a month earlier, compared with a revised 0.9% decline in June. The property price index slipped to 376.1 in July.

Home prices in the financial hub have dropped 4.5% so far this year.

“There’s a lack of positive news in the market and the pandemic is spreading again, so many buyers and sellers are waiting on the sidelines … driving down transaction volume,” Martin Wong, Greater China head of research & consultancy at Knight Frank, said.

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Covid Cases Rising

The financial hub, whose economy has been hit by Covid measures considered among the most stringent in the world, saw new cases rebounding to nearly 10,000 on Sunday.

Wong expected prices to continue easing in August and September, but possibly stabilising once Hong Kong and mainland China ease travel restrictions.

The city’s financial chief Paul Chan said the government has no plans to scrap cooling measures or intervene in the market regardless of short-term fluctuations.

To attract buyers, many property developers have launched new sales at discounted prices.

Interest rates in Hong Kong tend to move in lockstep with US rates, as its currency is pegged to the greenback, although they have lagged their US equivalents in recent months.

The market expected major banks in the city to raise their best lending rates next month if, as expected, the US Federal Reserve lifts rates again.

While all the banks kept their best lending rate unchanged amid US rate hikes this year, some lenders such as HSBC and Standard Chartered Bank, this month raised the cap on their mortgage lending rates by 25 basis points as interbank rates spiked to more than 28-month high.