HONG KONG Hong Kong private home prices fell 2.256 per cent in August from a month earlier to the lowest since February 2019, according to official data released on Wednesday. Market sentiment was hurt by rising interest rates.
A revised 1.44 per cent decline in July resulted in a drop in home prices in one of the world's most unaffordable housing markets.
The financial hub's home prices have fallen by 6.5 per cent in the first eight months of the year. The property price index was at 368.2 in August, slipping from an all-time peak of 398.1 in September last year.
The rising mortgage costs and the bleak economic outlook have led to increased pessimism among homeowners, while home prices for the full year are expected to drop around 10 per cent, the first fall since 2008.
Hong Kong banks raised their best lending rate by 12.5 basis points last week, the first rate hike in four years, following the U.S. Federal Reserve's third straight rate increase of 75 basis points.
Cusson Leung, the head of Asia property research at JP Morgan, said 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.
In order to make sentiment turn around, we need to have a better economy and a better stock market, according to Leung, adding that a reopening of the border with mainland China would boost demand.
According to Hong Kong financial chief Paul Chan last week, he did not see a risk to the city's real estate market or need to adjust property control measures.
After the best lending rate hike, Hong Kong's central bank relaxed the mortgage stress test requirement, helping property buyers borrow more from banks.