Hong Kong private home prices in July dropped to the lowest since February 2020, according to official data, as homebuyers turned more bearish due to rising interest rates and an uncertain outlook.
Home prices in one of the world’s most unaffordable housing markets eased 1.6 percent last month from a month earlier, the data showed on Monday, compared with a revised 0.9 percent decline in June. The property price index slipped to 376.1 in July.
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Home prices in the financial hub have dropped 4.5 percent so far this year.
“There’s a lack of positive news in the market and the pandemic is spreading again, so many buyers and sellers are waiting on the sidelines … driving down transaction volume,” said Martin Wong, Greater China head of research & consultancy at Knight Frank.
The financial hub, whose economy has been weighed down by COVID-19 measures considered among the most stringent in the world, saw new cases of coronavirus rebounding to nearly 10,000 on Sunday.
Wong expected prices to continue easing in August and September but possibly stabilising once Hong Kong and mainland China ease travel restrictions.
The city’s financial chief Paul Chan said the government has no plans to scrap cooling measures or intervene in the market regardless of short-term fluctuations.
To attract buyers, many property developers have launched new sales at discounted prices.
Interest rates in Hong Kong tend to move in lockstep with rates in the United States, as its currency is pegged to the greenback, although they have lagged their US equivalents in recent months.
The market expected major banks in the city to raise their best lending rates next month if the US Federal Reserve lifts rates again.
While all the banks kept their best lending rate unchanged amid US rate hikes this year, some lenders, including HSBC and Standard Chartered Bank, this month raised the cap on their mortgage lending rates by 25 basis points as interbank rates spiked to a more than 28-month high.