Correction in Hong Kong’s property market gathers speed as prices fall 3.5 per cent in November
- The monthly home price index fell 3.5 per cent to 366.3 in November, up from 2.56 per cent in October
- Largest fall in a single month since November 2008
Prices of lived-in homes in Hong Kong saw the sharpest decline in a single month in November since the global financial crisis in 2008.
The monthly home price index, which represents movements in the secondary property market, fell 3.5 per cent to 366.3 in November, compared to the 2.56 per cent slide in October, 1.27 per cent in September and 0.05 per cent in August, according to data from the Rating and Valuation Department.
Home prices have slumped 7.2 per cent after peaking in July following a 28-month surge starting in April 2016, with analysts citing concerns over the US-China trade war, expectations of rising mortgage rates, accelerated launches of new flats and a volatile local stock market as the main reasons for the declines.
“It is the largest fall in a single month since November 2008,” said Derek Chan, head of research at Ricacrop Properties.
Home price plunged 8.22 per cent in November 2008 and hit the year’s low of 104.8 in December. After a three-month decline, home prices began to rebound in January 2009.
A number of investment banks and analysts have forecast that property prices will continue to fall, with some predicting declines of as much as 25 per cent next year.
Denis Ma, head of research at property consultants JLL, expects home prices to fall at least 15 per cent in 2019.
Hong Kong’s home prices despite having fallen 7.2 per cent since August are still up 2.2 per cent since January.
“Part of the reason why prices fell at a faster rate in November was because developers started putting more projects on to the market in the previous months. The flurry of new launches has seen sell-through rates fall as developers also scrambled to find buyers,” Ma said.
Buying interest also remained weak.
“Home sales in the secondary market plunged 67 per cent over the weekend with just one flat sold,” said Willy Liu, a director at Ricacrop Properties, which monitors 10 major housing estates in Hong Kong.
Grand Central flats in East Kowloon nearly sell out, giving Sino Land a strong finish to rocky year for developers
Sino Land has been offering flats at its Grand Central development in Kwun Tong at prices that are 14 per cent lower compared to those nearby, luring home seekers away from the secondary market.
On Sunday, Chinachem Group released the price list for 72 flats at Sol City in Yuen Long from HK$14,589 per sq ft to HK$17,480 per sq ft, which were 6 per cent lower than the previous sale in November.
Prices for units ranging from 430 square feet to 752 sq ft recorded the largest fall of 3.8 per cent, according to government data.
A 494 sq ft unit at Aqua Marine in Cheung Sha Wan sold for HK$7.55 million (US$964,000), or HK$11,672 per sq ft, down 7 per cent from current transaction prices in the same housing estate, according to Ricacorp.