Hong Kong home prices drop to erase gains after property tax cut

HONG KONG’S second-hand residential prices fell for the fourth week to the lowest in more than two months, erasing the gains in values after the government removed property curbs in February.

The values for used homes dropped 1.4 per cent in the week ended May 19 compared with a week earlier, according to data from Centaline Property Agency. The decline also means that home prices are now lower than they were when the government scrapped the extra property taxes.

New home projects have attracted much demand with their low prices, Centaline said in a statement. The city’s property developers have been marketing their homes with discounts to clear their inventory, which piled up during the downturn in the past year. Earlier this month, CK Asset Holdings slashed prices for some units in the project #LYOS by a third to entice buyers.

CK’s peers including Sun Hung Kai Properties and Henderson Land Development are likely to follow CK’s price-cutting strategy, according to Bloomberg Intelligence (BI). This is expected to hurt values for existing homes and expose developers’ profits to increased risk, BI said. BLOOMBERG