Hong Kong home prices to extend decline after October’s 0.6 per cent surprise drop as Covid-19’s fourth wave dents confidence

The home price index for lived-in homes fell 0.6 per cent to 380.9 last month, as owners continued to settle for less than the asking price

Lay-offs at big firms like Cathay Pacific might influence other companies’ decisions about job cuts and unpaid leave, further denting demand, warned Knight Frank

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It is likely most of October’s transactions involved owners who were still willing to reduce their asking prices because of concerns about the economic outlook, said Derek Chan of Ricacorp. Photo: Winson Wong

Published: 3:29pm, 26 Nov 2020Updated: 11:05pm, 26 Nov 2020

The fourth wave of coronavirus infections is expected to drag Hong Kong’s home prices down further after they “unexpectedly” fell 0.6 per cent in October.

In an earlier-than-expected release, the government’s Rating and Valuation Department on Thursday revealed that the secondary market home price index dropped to 380.9 last month.

“Even though the epidemic was relatively stable, the property price index last month unexpectedly softened,” said Derek Chan, head of research at Ricacorp Properties.

He believed this was because the economic situation – Hong Kong is mired in its worst ever recession – and high unemployment are still rattling the market.

The number of confirmed cases of Covid-19 decreased significantly in October, and the market for new homes became very active again. And in the second-hand market, some homeowners had been less willing to bargain with potential buyers, suggesting a slight rebound in confidence.

Nonetheless it is likely that most of October’s transactions involved owners who were still willing to reduce their asking prices because of concerns about the economic outlook, Chan said. It was this, rather than a lack of positive market sentiment, that led to the surprise fall in the property price index last month, he believes.