Hong Kong’s private residential property prices will continue falling for about 1.5 percent for August as the COVID-19 pandemic rages on, according to property analysts.
As the outbreak began to worsen in early July, home prices in the world’s least affordable market recorded the first drop since April – dropping 0.5 percent in July from the previous month – the Rating and Valuation Department said on Monday.
The price declines in July have yet to fully reflect the pandemic’s impact on the property market, as the government tightened social distancing measures at the end of that month
Derek Chan
head of research at Ricacorp Properties
Year-on- year, private housing prices have fallen 2.2 percent, but are still up 1.5 percent from January, supported by strong demand and low interest rates.
Derek Chan, head of research at Ricacorp Properties, said the price declines in July have yet to fully reflect the pandemic’s impact on the property market, as the government tightened social distancing measures at the end of that month.
With buyers staying on the sidelines and owners more willing to bargain or cut prices, Chan believes prices will retreat a further 1.5 percent in August.
He expects prices to rally in late September as the pandemic eases. The market could claw back 3 to 5 percent throughout the year if the local virus situation doesn’t worsen in the fourth quarter, he said.
Hong Kong has been hit by a third wave of coronavirus infections since early July. The government successively tightened social distancing measures, suspending most public services and shutting down bars and entertainment venues. As a result, the home transaction volume hit a four-month low in August.
The price drop in July was reflected in almost all types of units across the city, except for luxury properties, the price of which saw a three-month surge.
Thomas Lam, executive director of Knight Frank, said the decline was smaller than expected and is believed to have cushioned by sales of bigger apartments.
He expects home prices to fall by about 5 percent this year. There won’t be a slump, but it’s difficult to see a V-shaped or U-shaped rebound, while the future trend will still depend on Hong Kong’s economic performance and the course of Sino-US relations, he said.
