Hong Kong home prices reverse three-month drop to climb 0.5% in April

HONG KONG: Hong Kong private home prices reversed a three-month decline in April, the latest official data showed on Friday, as the financial hub stabilised after COVID-related woes and homebuyer sentiment was boosted by waves of new development launches.

Prices in what survey company Demographia ranked the world’s most unaffordable housing market, climbed 0.5% in April from the previous month, according to official data, compared with a revised 0.6% fall in March.

Hong Kong’s economy was hit earlier this year after some of the world’s most stringent social restrictions were imposed to tackle the latest COVID outbreak. The measures also prompted real estate agents to lower forecasts for 2022.

After months of muted activity, property developers rushed to launch new sales in April in response to the withdrawal of some COVID restrictions, triggering over-subscribed demand from buyers that drove up both transaction volumes and prices.

After prices posted a fall of 3% in the first three months, some realtors expected they had bottomed, though others remained more cautious.

Online property marketplace Spacious expected prices to drop another 5% in the rest of the year, citing a weaker local economy, a deteriorating mortgage rate outlook and the negative effect on personal wealth from weaker equity markets.

Spacious chief operating officer James Fisher said the property market would lose steam after the initial bounce in transaction in April and May. That bounce was stoked by the release of pent-up demand following the relaxation of restrictions and developer discounts in the primary market, Fisher said.

“Developers continue to push new supply via discounts and these headwinds remain, we think overall market pricing will deteriorate further over the next few months,” Fisher said.

He added his company’s data shows asking prices in the secondary market continued to decline and overall buyer demand remained weak.