Banks cut prices on foreclosed properties in Hong Kong as buyers turn cautious amid distress, market correction

About one-third of 98 foreclosed properties on the market have had their prices trimmed in June, according to Century 21 Surveyors

Business sentiment is at a multi-year low and Hongkongers are filing bankruptcies at the fastest pace since 2016

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A pedestrian looking at some distressed assets for auction in Hong Kong. Photo: K.Y. Cheng

Published: 9:00am, 24 Jun 2020Updated: 9:07am, 24 Jun 2020

Banks are being forced to reduce prices on foreclosed properties to recoup their loans, as buyers in Hong Kong become increasingly cautious about the economic outlook and a deeper market correction.

About one-third of 98 foreclosed properties on the market have had their prices trimmed in June, according to the latest list creditors give agents, up from about a quarter in April, according to Century 21 Surveyors. The average price reduction was 6 per cent.

“This is the latest trend, there is some momentum to it because of the weakening economic conditions,” said Henry Choi, a director at Century 21 Surveyors, which conducts property auctions. “Buyers are getting very selective and cautious” even in already distressed assets, he added.

Hong Kong’s economy shrank by a record 8.9 per cent last quarter while unemployment reached the highest in 15 years, slammed by the coronavirus pandemic and the lingering impact of anti-government protests last year. A controversial national security law is also roiling the market as China speeds its implementation.

Henry Choi, Director of Century21 Surveyor. Photo: K.Y. Cheng

The number of foreclosed properties in Hong Kong could reach the highest level since the global financial crisis by early next year, as owners struggle to repay mortgages, Choi said last week.