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HONG KONG – Hong Kong’s home prices dropped to their lowest level in almost seven years as high interest rates continue to weigh on buyers’ appetite, driving them to rent instead.
Residential prices fell 2 per cent in November from a month earlier, a seventh straight decline, according to government data.
The price index is now at its lowest since early 2017. In contrast, rents in the city rose for a 10th month to the highest in four years.
Expensive borrowing costs are discouraging home buyers, prompting them to ride out the tightening cycle by renting apartments. The rental market is also getting a boost from the government’s push to lure foreign professionals to the city.
Mr Sammy Po, chief executive of the home division at Midland Realty, said on Dec 27 that home prices may rise about 5 per cent in 2024 if interest rates fall and the government removes even more property cooling measures.
Rents may increase 10 per cent in 2024, he added.
From individual home owners to listed developers, sellers in the city are struggling to find buyers. Property firms are resorting to offering discounts on their new projects to speed up sales.
Builders’ share prices have underperformed the Hong Kong’s benchmark index in 2023. Sun Hung Kai Properties is down by more than 20 per cent since the start of the year, while New World Development has tumbled 46 per cent. BLOOMBERG
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