Home prices languish at eight-year lows

June Chen

Hong Kong's private home prices fell for a fourth straight month in August to a fresh eight-year low, data from the Rating and Valuation Department showed.

The residential property price index in August dropped by 1.7 percent to 292.1 from a month earlier, the data showed.

By falling 5.65 percent in four months, the decline has offset the gains made following the removal of all housing curbs on the primary market in February, and hit a new low in roughly eight years.

To put the decline in context, the index last month was 26.6 percent below the record high of 398.1 points set in 2021.

Small to medium-sized units less than 100 square meters in size saw their prices decline by 1.7 percent from July and about 13 percent from a year ago. And large flats more 100 square meters recorded a drop of 1.3 percent compared to July and a year-on-year decrease of 8.8 percent.

However, the rental market in the city maintained its bullish momentum.

The rental index rose for a sixth consecutive month to 201.8 points, up 1.2 percent from the previous month and 7 percent form a year ago to a nearly five-year high since September 2019.

The rental index has grown by 6.2 percent in the first eight months of the year.

Real estate consultancy Knight Frank predicts home prices in the city will drop 8 percent this year and slightly recover by 3 percent next year if the US maintains its expected pace of interest rate cuts.

Sixty-six percent or 970 of the 1,465 second-hand residential home transactions in August were profitable.

But the number of profitable deals fell by 0.3 percentage points month-on-month and for a second consecutive month to a nearly three-month low, according to the Land Registry and Ricacorp Properties.

The real estate agency predicts the average profitable deals ratio in the secondary market will further drop in near future as low-price strategies implemented by developers on new projects drag prices lower in the market.

However, it expects the positive impact of interest rate cuts in the city will boost the market as soon next month.