Hong Kong’s August home price index drops by the most in six months as recession, Covid-19 sap investment appetite

The August price index for lived-in homes dropped by 1.1 per cent to 380.6, according to the Rating and Valuation Department, the biggest decline since February and down 4.1 per cent from the May 2019 peak of 396.9

The price index fell 2.1 per cent among large homes measuring over 1,722 square feet (160 square metres), the biggest drop for abodes of all sizes

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General shots at Kingswood Villa in Tin Shui Wai on 19 June 2011. Photo: SCMP

Published: 12:02pm, 30 Sep 2020Updated: 4:23pm, 30 Sep 2020

Hong Kong’s prices for used residential property declined by the most in six months in August, as the coronavirus pandemic combined with the city’s worst recession on record in sapping investors’ appetite.

The August price index for lived-in homes dropped by 1.1 per cent to 380.6, according to the Rating and Valuation Department on Wednesday, the biggest decline since February and down 4.1 per cent from the May 2019 peak of 396.9. The price index fell 2.1 per cent among large homes measuring over 1,722 square feet (160 square metres), the biggest drop for abodes of all sizes.

The data, a lagging indicator in the secondary market, underscores the uncertainties in one of the world’s most expensive real estate market, as owner-occupiers and investors grapple with the best timing to take the plunge, with 11,994 leftover units unsold, according to Midland Realty’s data. For now, all eyes are on the daily tracking cases of Covid-19 in the city, as the market remains cautious about the possibility of a fourth wave of infections to hit Hong Kong.

“The fourth quarter very much depends on the change in” local infection numbers, said Derek Chan, head of research at Ricacorp Properties. “If the pandemic eases in the fourth quarter and market sentiment is revived with more new launches that boost the secondary market, home price could increase … by 3 to 5 per cent. But if the pandemic turns for the worse, home price will worsen in the same way.”

The home price index is likely to be stable in September, with an expected increase of up to 0.5 per cent, as local infections ease and social distancing measures are relaxed, Chan said. If the local infections remain stable, the October price index may rise by an estimated 1 per cent. But it will see a further drop if there is a new wave of infections, he said.

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