Negative equity cases jump 14 times as Hong Kong property prices fall again in March
Number of private homes under construction hit record 13,300 units in first quarter
Hong Kong’s tottering residential market was hit by a gust of negative news on Friday, with the supply of new private homes projected to rise to a record high of 92,000 and negative equity cases rising alarmingly as home prices continue to fall.
The Rating and Valuation Department’s latest data showed home prices fell in March for the sixth straight month, by 1.3 per cent. With that, Hong Kong’s once-sizzling property prices have now lost 11.7 per cent in the last six months.
With prices on the down, the incidence of negative equity – potential indebtedness when the market value of a property falls below the outstanding amount of a mortgage secured on it – is spreading quickly. The Hong Kong Monetary Authority (HKMA) said the number of negative equity cases rose 14 times to 1,432 in the first quarter of this year from the previous quarter – the highest number since the fourth quarter of 2011.
Hong Kong’s record in negative equity cases stands at 105,697, set at the height of the Severe Acute Respiratory Syndrome (Sars) epidemic in 2003.
“Since property prices are in a down cycle, the number of negative equity cases will continue to increase this year. That will put prices of second-hand homes under considerable pressure, with more foreclosed properties released for auction,” said Henry Mok, regional director at property consultancy JLL.
The number of foreclosed properties have already doubled in Hong Kong from a year ago to about 130.