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Hong Kong’s lived-in home prices slump to lowest level since December 2020 as caution prevails ahead of rate hike

  • The lived-in home index fell 1.1 per cent to 380.5 in June, the lowest since December 2020, according to data from the Rating and Valuation Department
  • The 1.1 per cent price decline in June was the most since 1.8 per cent in February

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A property agent is seen working at a real estate agency in Wong Tai Sin, Hong Kong. Photo: Edmond So
Lam Ka-sing
Hong Kong’s home prices posted the biggest drop in four months in June as they were weighed down by rising interest rates and downbeat market sentiment, with market observers expecting weakness to persist in the short term.
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The lived-in home price index dipped 1.1 per cent to 380.5 in June, the most since 1.8 per cent in February, taking it to the lowest level since December 2020, according to data released by the Rating and Valuation Department on Wednesday. Prices fell 0.2 per cent in May.

“The property price index may fall by about 1 per cent in July,” said Derek Chan, head of research at Ricacorp Properties. “The market expects that the United States will still raise interest rates at a faster pace … which will put pressure on both volume and price in the secondary market.”

Hong Kong’s property market has cooled down in recent months amid the prospect of higher interest rates. Mortgage payments linked to the Hong Kong interbank offered rate have risen since March following the rate increases in the US.

The Hong Kong Monetary Authority (HKMA), the city’s de facto central bank, raises rates in lockstep with the US Federal Reserve to defend the stability of the local financial system. With the Fed widely expected to increase rates by at least 75 basis points on Thursday as it looks to contain inflation running at a 40-year high, banks in Hong Kong are likely to increase the prime local lending rate for the first time in four years.
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Financial Secretary Paul Chan Mo-po told the Post on Wednesday that commercial banks in Hong Kong will have no choice but to raise prime rates increase, but not at the scale and pace of the Fed.
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