Home prices decline to lowest level in 14 months
A total of 264 flats change hands at a loss during the first three months of the year
Lived-in home prices in Hong Kong fell for the third straight month in March to a 14-month low, with many homeowners selling at heavily discounted prices or even at a loss as high unemployment and potential interest rate rises keep buyers away.
Prices fell 0.7 per cent to 381.3 last month, the lowest since 381.9 in January 2021, according to an index published by the Rating and Valuation Department yesterday. Home prices eased 3.2 per cent in the first three months of the year, wiping out the 3.19 per cent gain in 2021.
“Homeowners selling at a loss reached a new high in the first quarter,” said Derek Chan, head of research at Ricacorp Properties.
A total of 264 homes changed hands at a loss in the first quarter, the highest since the third quarter of 2010, according to Ricacorp. The average gain per residential transaction, meanwhile, fell for the third consecutive quarter to 66.7 per cent, the lowest in the past 5.5 years.
Homebuyers are staying on the sidelines in anticipation of an imminent increase in interest rates, while demand is also being affected by rising unemployment and a slump in the stock market.
The unemployment rate hit 5 per cent in the three months ending in March, the highest in nine months. The city’s benchmark Hang Seng Index fell 6 per cent in the same period.
“Hong Kong home prices will fall 5 per cent in the first half with a brief respite in April,” said Albert Wong, honorary consultant at AA Horses Mortgage Brokerage Services. He expects home prices to tumble by 20 per cent over the next two years.
However, property agents are optimistic, saying home prices have bottomed out.
Ricacorp’s Chan said sales volume and prices would be boosted by the release of pent-up demand in May and June.
Louis Chan Wing-kit, vice-chairman and chief executive for residential at Centaline Property, said he expected activity in the primary residential market to improve from now as more developers speed up new project launches.