Home prices fell 1.71% in August from July, following a revised 1.75% drop in July. — Reuters
HONG KONG: Hong Kong’s private home prices dropped for the fourth consecutive month in August, official data reports yesterday, as potential buyers remained on the sidelines ahead of interest rate cuts.
The market is watching whether the interest rate reduction announced by Hong Kong banks last week will give a boost to the struggling property market in one of the world’s most unaffordable cities.
Demand has lost steam since May after a short-lived bounce, thanks to the lifting of all property purchase curbs in February, as realtors said much of the pent-up home buying quest has been sated, while property developers launched new flats at steep discounts to boost sales.
Home prices fell 1.71% in August from July, following a revised 1.75% drop in July.
The prices have dropped 6.2% so far this year.
They have tumbled 26.6% from their 2021 peak, staying at their lowest level since September 2016, hurt by higher mortgage rates, an outflow of talent and a weak market outlook.
Knight Frank senior director Martin Wong said he expected prices could be bottoming in the third quarter after the September rate cut and stay low in the fourth quarter.
JLL Hong Kong chairman Joseph Tsang said he saw prices to decline this year, as developers are likely to rush to launch new projects in response to the rate cut with competitive prices.
Morgan Stanley in a research note forecast a 5% home price recovery in 2025 helped by the US rate cuts, following an 8% drop in 2024.
Hong Kong’s major banks including HSBC and Bank of China (Hong Kong) surprised the market last week by cutting their best lending rate in the city by 25 basis points, following the US Federal Reserve’s interest rate cut.
Hong Kong’s monetary policy moves in lock-step with the United States as the city’s currency is pegged to the greenback, but local banks make their own rate decisions depending on their funding costs. — Reuters
