Hong Kong home prices slip from all-time high amid concerns about stock market wealth, policy speculation

Priced declined 0.15 per cent in August, while the reading for July was revised up to show an all-time high

Steep losses in stock market and speculation about market curbs in the October policy address will keep sentiment in check in the short term

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An aerial view of a housing project in Lam Tin, Hong Kong. Photo: Martin Chan

Published: 3:16pm, 28 Sep 2021Updated: 10:32pm, 28 Sep 2021

Hong Kong’s lived-in home prices retreated for the first time this year in August from an all-time high, after a slump in the local equity market weakened buying sentiment.

Prices declined 0.15 per cent to 397.1 last month, according to an index published by the Rating and Valuation Department. The department revised the reading for July to 397.7 from previously reported 396.3. The previous record of 396.9 was set in May 2019.

The city’s benchmark equity index has declined every month this quarter, including a 10 per cent rout in July because of concerns about regulatory crackdown on private businesses and China Evergrande’s debt crisis. The slump has erased US$615 billion in market value from 60 companies in the benchmark Hang Seng Index.

“Homebuyers are getting more cautious as the [index] is close to the historical peak,” said Martin Wong, head of research and consultancy in Greater China at Knight Frank. “The low-interest rate environment will continue to support [the market].”

The drop in August could also be due to the wobble in the stock market since the middle of the year, according to Derek Chan, head of research at Ricacorp Properties. Prices are likely to continue to see-saw around current levels, he added.

Property buyers have remained apprehensive lately as stock prices wavered, hurting the wealth effect. Another reason for the caution is speculation about property market conditions before the annual policy address on October 6, Chan said.