Hong Kong private home prices fall in May

HONG KONG Reuters-Hong Kong private home prices slowed in May after a short-lived bounce, latest official data showed on Tuesday, as potential homebuyers turned wary of higher borrowing costs.

According to official data, home prices fell by 0.3% last month from a month earlier in the month, compared to a revised 1% rise in April. In January to March, prices fell by a month. According to Demographia, the Asia financial hub is the world's most unaffordable housing market for the 12th consecutive year.

Hong Kong's economy was buckled this year under some of the world's most stringent restrictions to contain COVID 19 outbreaks, but sentiment improved after the city relaxed most of the measures and there were waves of new development launches.

The number of home transaction agreements in May jumped 59% from April to a 10 month high.

The property index tracked transactions in the secondary market, while sales in the new home market held up, which resulted in softer prices, according to Realtors.

Some homebuyers were more cautious ahead of expected rate increases in the second half of the year. The city's interbank market rate, linked to mortgage rates, is already rising.

The Hong Kong Monetary Authority increased its base rate by 75 basis points to 2% after the U.S. Federal Reserve hiked the same margin, though major banks in the city decided to leave their best lending rates unchanged.

The head of the central bank has urged the public to carefully assess and manage the risks when making property purchases and mortgage decisions.

The Hong Kong Interbank Offered Rate, a benchmark used for pricing mortgages, rose to its highest in two years this month.