Hong Kong poised for first annual decline in home prices in 12 years as coronavirus deepens recession, adds to unemployment woes

The fourth wave of Covid-19 infections is likely to tilt the market into negative territory in December after home prices slipped again last month

Analysts predict house prices will drop by as much as 5 per cent next year

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Buying sentiment in Hong Kong has taken a drubbing this year amid four waves of the deadly coronavirus. Photo: Felix Wong

Published: 1:44pm, 29 Dec 2020Updated: 1:57pm, 29 Dec 2020

Hong Kong looks likely to record its first annual drop in home prices for 12 years as a fourth wave of coronavirus infections threatens to worsen the city’s recession and unemployment problem.

The official price index for used homes slipped 0.2 per cent to 380.4 in November, the lowest level in seven months, according to an earlier-than-expected release from the Rating and Valuation Department on Tuesday.

November’s index is 1.3 per cent lower than it was a year ago, and although it is 0.2 per cent higher than it was in January, analysts believe the full impact of the current spike in Covid-19 cases will show up in this month’s data.

“Including December, home prices should drop about 1 per cent for the whole year,” said Derek Chan, head of research at Ricacorp Properties. “This would be the first drop in 12 years, because of the rally of 11 years from 2009 to 2019.”

The slide could be attributed to the coronavirus pandemic, which has led the city into its deepest recession and highest unemployment level in decades, Chan said.