Hong Kong's home prices fall 2.256 pct in August

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Hong Kong's home prices fall 2.256 pct in August

PHILIPPE LOPEZ AFP HONG KONG - Hong Kong private home prices fell 2.256 percent in August from a month earlier to the lowest since February 2019, as market sentiment was hurt by rising interest rates.

READ MORE: Finance chief says there is no risk to property prices.

The drop in home prices in one of the world's most unaffordable housing markets last month followed a revised 1.44 percent decline in July.

The financial hub's home prices have fallen by 6.5 percent in the first eight months of the year. The property price index was at 368.2 in August, slipping from a all-time peak of 398.1 in September last year.

Home prices for the full-year are expected to drop around 10 percent, the first fall since 2008, as rising mortgage costs and a bleak economic outlook have deepened pessimism among homeowners.

Hong Kong banks raised their best lending rate by 12.5 basis points last week, the first rate hike in four years, following the US Federal Reserve's third straight rate increase of 75 basis points.

The JP Morgan head of Asia property research, Cusson Leung, said that the smaller-than-expected rate hike was positive but the property market would likely soften in 2023 due to a weak global economy.

He expected the decline to be moderate.

ALSO READ: HKMA raises base rate to 3.5% after Fed hike.

In order for sentiment to turn around, we need to have the help of a better economy and a better stock market, Leung said, adding that a reopening of the border with the Chinese mainland would boost demand.

The Hong Kong Special Administrative Region financial chief Paul Chan Mo-po said last week he did not see a risk to the city's real estate market nor the need to adjust property control measures.

After the best lending rate hike, the Hong Kong Monetary Authority relaxed the mortgage stress test requirement, helping property buyers borrow more from banks.