Hong Kong’s index of used homes fell in June as trade war, public unrest combine to stop property market bull run

The price index of used homes fell to 393.7, according to the Rating and Valuation Department’s data

Analysts expect prices to continue dropping in the next few months, as civil unrest add to uncertainties, deterring buyers from committing to large purchases

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Property analysts said the decline of lived-in home prices will accelerate in the coming months. Photo: SCMP

Published: 12:01pm, 31 Jul 2019Updated: 10:37pm, 31 Jul 2019

The prices of Hong Kong’s lived-in homes dropped by 0.8 per cent in June, as the year-long US-China trade war and unprecedented levels of public unrest combined to send property buyers to the sidelines, ending a five-month bull run in the city’s real estate market.

The price index of used homes fell to 393.7, according to the Rating and Valuation Department’s data. Property analysts said the decline will accelerate in the coming months.

“The index will still adjust downwards in the next one to two months, judging from the recent social [upheaval] and the market sentiment,” said Thomas Lam, executive director at Knight Frank. “The housing market will be more volatile and drop by 5 per cent in the second half of this year.

The volume of Hong Kong’s monthly residential sales tumbled by more than 43 per cent in June to a four-month low of 4,627 units, while the turnover of newly built homes fell to 1,111 units, the lowest monthly level this year, according to Land Registry records compiled by Knight Frank.

Hong Kong’s property bull run has been hobbled since a June 9 march by an estimated 1 million protesters unleashed a wave of civil unrest that had never been seen in the city of 7.5 million residents. Overall residential property prices rose by 10.4 per cent between January and May, according to the Rating Department’s data.

“The movement of home prices closely follows the trend of the Hang Seng stock index, with a time lag of up to three months,” said Knight Frank’s Greater China director of research David Ji, citing the consultancy’s correlation study. “With the HSI having dropped close to 10 per cent since May, there is a possibility for mass home prices to undergo some corresponding adjustment.”