Hong Kong home prices start to lose steam as price growth slows for second straight month in June
Runaway home prices in the world’s most expensive city to buy property rises for 27 months in a row in June
The prices of lived-in homes in Hong Kong gained for a 27th straight month in June, but the rate of increase slowed down for a second straight month.
An index of secondary-market home prices rose 6.3 points, or 1.644 per cent, to 389.4 in June, according to data released by the Rating and Valuation Department on Tuesday – a bit slower than the 1.645 per cent gain in May, and 1.86 per cent increase in April.
Prices of flats measuring less than 430 square feet gained 1.58 per cent to 429.7 on the index.
Flats of 1,722 sq ft or more increased by just 1.27 per cent to 334.4.
The rental index meanwhile surged by 1.2 per cent to 193.7, much faster than the 0.3 per cent increase in May, reflecting an accelerated increase in leasing costs, the data showed.
Analysts expect home price growth to further slow down in the coming months because of a slew of government measures announced recently to ease the housing crisis in Hong Kong, the world’s most expensive place to own property.
“It’s a sign the market is cooling down,” said Derek Chan, head of research at Ricacorp Properties. “We’ve seen that homeowners are giving a larger room for bargaining and more buyers are adopting a wait-and-see approach.”
Data from Ricacorp shows that transaction volume of lived-in homes last week dropped about 42 per cent compared to the week of June 25, when the government announced the cooling measures.
Headwinds also include downbeat stock markets, global trade tensions and the prospect of interest-rate rises.
“The stock market has been quite volatile since January and news about the Sino-US trade war has impacted the purchasers’ sentiment,” said Vincent Cheung, deputy managing director for Asia valuation and advisory services at Colliers International.
Earlier this month, Citibank became the first major financial institution to predict a correction in Hong Kong’s home prices this year, saying prices were likely to drop 7 per cent in the second half of 2018.
The city’s home prices have rocketed 13 per cent in the first half, while property agents have maintained their price growth forecast for the whole year at about 15 per cent.
On June 28, Chief Executive Carrie Lam Cheng Yuet-ngor introduced measures to cool the runaway home prices, including a vacancy tax on newly built flats remaining unsold; unlinking the pricing of government-subsidised housing from private market rates; and building affordable housing on at least six prime sites originally reserved for private developers to construct luxury homes.