Although home prices in overcrowded Hong Kong showed signs of a slight rebound in March, experts have warned it may be too early to cheer the end of a downward trend.
An index of prices for private residential flats edged up 0.42 percent last month, compared with February, snapping a three-month decline in the city’s once high-flying housing prices, according to data from the Rating and Valuation Department on Wednesday.
At this moment, it may not be safe to say the home market has bottomed out and will rebound in no time. I think the current correction in housing prices is not over yet. The downward trend will continue
Thomas Lam,
executive director at Knight Frank
Compared with the previous year, however, the March index slipped 0.9 percent.
The local property market, with the dubious honor of being the world’s least affordable for the 10th year running, is struggling to recoup early losses from the months-long, citywide violent protests and the novel coronavirus pandemic.
By late March, home prices had lost nearly 5.4 percent from their peak in May last year. In the first quarter of the year, prices had fallen 1 percent.
Hopes of a property-market recovery have been fueled by a slowdown in the coronavirus pandemic, as Hong Kong recorded no new infections for the fourth day in a row on Wednesday. It was the fifth time in nine days that no new confirmed case was recorded, with the local tally standing at 1,037.
Thomas Lam, executive director at Knight Frank, said the March housing index may not completely reflect the real impact of the pandemic.
“At this moment, it may not be safe to say the home market has bottomed out and will rebound in no time. I think the current correction in housing prices is not over yet. The downward trend will continue,” he said.
Hong Kong’s unemployment rate shot up in March for the sixth consecutive month, hitting 4.2 percent — the highest in more than nine years.
As recession in the Asian financial center deepens and the pandemic continues to wreak havoc on the local economy, higher unemployment will certainly erode housing demand, said Lam, predicting a further 10-percent fall in local home prices this year.
