Hong Kong Jan home prices at 11-month low on new Covid surge

Hong Kong

HONG Kong private home prices dropped for the fourth consecutive month in January to the lowest since February 2021, official data showed on Thursday (Feb 24), as the financial city was hit by a new wave of Covid-19 cases.

The prices eased 1.1 per cent last month, showed the data, compared to a revised fall of 0.1 per cent in December. The January monthly drop was also the biggest in 11 months.

Hong Kong's property market is among the world's most expensive and has stayed largely resilient during the mass protests in 2019 and the pandemic over the past two years, supported by robust demand and lower interest rates. Its home prices reached a record high in September before consolidating.

Some property agents lowered their full-year price forecast this month as coronavirus infections surged in the city and the government rolled out some of the most stringent social restrictions in the world, affecting many businesses.

Hong Kong Property Services expected prices to fall within 5 per cent in the first quarter, but rise 3-5 per cent for the full year on a rebound after the pandemic stabilises.

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"In the last four waves of outbreak, prices all recovered afterward," said Dave Ma, Hong Kong Property Services chief operations officer. "Compared to the first outbreak, sellers are not slashing prices as much now and the transaction volumes are higher because people are looking for bargains."

He said some sellers offloaded property below market price because their business was seriously affected by the pandemic.

Property developers are delaying their new launches, resulting in a plunge in new home transactions. For the secondary market, realtor Centaline expected deal number in February to drop 18 per cent from January to a 24-month low.

Seen as a boost to the property market, the government announced a relaxed rule to allow first-time buyers to borrow 80 per cent mortgage for homes transacted HK$12 million (S$2.1 million) and below - compared to HK$10 million previously- and 90 per cent for HK$10 million and below, compared to HK$8 million previously.

For transactions more expensive than HK$12 million, which is the mid- and large-sized home market, buyers can only borrow up to 50 per cent. REUTERS