Hong Kong's home prices fall towards decade low on interest rate, tariff headwinds
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Lived-in home prices retreated 0.9 per cent in February from the preceding month to the lowest since July 2016, according to an index compiled by the Rating and Valuation Department. Prices have declined every month since January 2022 versus year-earlier levels - a cumulative drop of 27 per cent, the data showed.
The trend suggests bolder measures may be needed to boost confidence among homebuyers and shore up demand. Official efforts in October to ease mortgage financing rules have produced a short-lived bounce as a new round of trade hostilities erupted last month. Chances of further interest-rate cuts have diminished amid renewed worries about inflation.
The latest data 'reflects the
sluggish Lunar New Year market in late January and early February, coupled with uncertainties stemming from the Federal Reserve's decision to hold interest rates steady,' said Derek Chan, head of research at Ricacorp Properties. Fresh tariffs on Chinese goods, following President Donald Trump's inauguration in late January, also softened market sentiment, he added.
The Fed and the Hong Kong Monetary Authority have kept their key rates on hold in the past two policy meetings, after cutting it three times from September to December last year.
Gains in stock prices and government incentives in the form of lower stamp duties on property transactions could help stabilise demand at current levels, according to Eddie Kwok, executive director of valuation and advisory services at CBRE Hong Kong. Prices, however, may struggle to appreciate, he added.
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'We see residential prices bottoming out,' Kwok said. 'However, as developers are pushing units [in new launches] to capture pent up demand, it might be difficult to record a strong rebound.' Any upside in home prices may be seen in the primary housing market, he added.
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