Hong Kong home prices snap 5-month decline in Nov

Hong Kong

HONG Kong private home prices rose 1.8 per cent in November, gaining for the first time since May, supported by a jump in small flat transactions after the government relaxed mortgage rules.

The rise compares to October's revised 1 per cent drop in one of the world's least affordable property markets that has been hit by sometimes violent anti-government protests since June.

Small-sized flats of up to 69.9 square metres led the gains last month, up 1.9 per cent, government data showed on Tuesday. A flat of 60 square metres on Hong Kong Island cost an average HK$10.85 million (S$1.9 million), according to the data.

Aiming to support first-time home buyers, the government in October reduced down-payment requirements for homes costing up to HK$10 million.

But as the protests take a heavy toll on the city's economy, banks fear a deepening recession, unemployment and bankruptcies, could make it hard for borrowers to pay back dues.

Transactions in the new home and secondary home markets in December are likely to have dropped to the lowest in 12 months and three months, respectively, according to property agent Centaline, as the impact of the relaxed mortgage cap faded.

Market observers are generally conservative about property prices into 2020.

Consultancy Cushman & Wakefield is projecting a 10-15 per cent fall for the first half if the unrest continues.

"We're worried about Q2 to Q3 when the real economic impact of political events surfaces; it will put pressure on housing prices," Alva To, Greater China vice-president of Cushman & Wakefield, said.

But some realtors, including Ricacorp Properties, expect prices to rise as much as 10 per cent next year on pent-up demand with local political crisis and China-US trade tension resolving.

The property sector has been relatively resilient compared with the tourism and retail sectors that have been hit badly by the protests and the US-China trade dispute.

Hong Kong's home prices are up 6.9 per cent so far this year.

Nearly seven months of protests have evolved into a broader pro-democracy movement since they erupted in response to a now-withdrawn bill that would have allowed extraditions to mainland China, where courts are controlled by the Communist Party.

Demonstrations will continue into 2020, with a march planned on New Year's Day. REUTERS