Rise in interest rates sends housing prices down 3-4pc

Prices in the secondary residential market have declined further as buying sentiment has weakened, hit by the rise in interest rates, agents say.

Some said transaction prices had fallen 3-4 per cent in the past few days since banks raised the prime lending rate by 25 basis points to 8.5 per cent on Friday.

However, they said the rate rise would not dampen sales activity too much because transactions had already dived to low levels in the past two months.

Residential transactions in July were reported at 6,000 but total deals last month are estimated to have fallen to 5,000.

Hong Kong Property Services (Agency) managing director Michael Choi Ngai-min said flat owners became more flexible on selling prices after the United States raised prime rates by a quarter of a percentage point last week.

The rate rise in Hong Kong further encouraged them to cut prices to attract cautious buyers, he said.

The 25 basis points increase did not substantially boost the burden on new buyers as banks fought for customers by offering preferential mortgage lending rates.