Prices at large decades-old housing estates in Hong Kong are likely to fall further after owners signalled their willingness to compromise on their expectations amid a worsening wave of Covid-19 infections and concerns about higher interest rates. The Centa-City Leading Index tracking prices in mass housing estates has retreated 3.4 per cent since it peaked on August 8 last year, according to compiler Centaline Property Agency’s data from January 16. The reading is set to weaken through the Lunar New Year next month, a company official said. Hong Kong recorded 140 new cases of Covid-19 infections on Sunday, the worst outbreak in 18 months, after scores of residents at a housing estate were ordered to undergo tests last week amid a lockdown. The Federal Reserve has signalled three rate increases this year, spooking investors especially in Hong Kong, which adopts policy in lockstep with the US central bank. “Correction will definitely sustain,” said Wong Leung-sing, senior associate director of research at Centaline. “It has not really reflected the [Omicron variant] landing in Hong Kong, which has caused a lot of trouble now.” Large developments built more than 20 years ago in Kowloon and Hong Kong Island are likely to experience bigger declines as investors, who tend to be more sensitive to interest-rate changes, occupy a higher proportion of housing estates than those in New Territories, Wong added. Hong Kong’s lived-in home prices will drop 5 per cent in 2022 as people, capital head for the exit, UBS says South Horizons in Southern district suffered the most, having lost 7.6 per cent in value to HK$17,296 per sq ft between August 8 and December 26, according to Centaline data. Taikoo Shing in Quarry Bay is the next biggest loser with a 6.5 per cent drop to HK$19,917 per sq ft. Kai Tak and Ap Lei Chau are among the districts with the highest proportion of listings offering price cuts, according to Midland’s website, including smaller units of less than 431 sq ft. This has “driven the number of deals up significantly” despite the pandemic, said Chris Ngai, district manager at Ricacorp Properties. “Many owners are willing to reduce prices to push transactions forward,” said Sammy Po, chief executive of Midland Realty’s residential division. “Some sellers who are eager to cash out may even offer discounts of 5 per cent or more” to entice buyers, he added. The price actions in the early days of 2022 underscores some jitters about the outlook for the local market. Analysts at Morgan Stanley and UBS have predicted softer conditions this year, partly due to emigration. JPMorgan stands on the opposite side with forecast for a gain in 2022. To be sure, houses in New Territories also offer compelling opportunities for bargain seekers. Almost 17 per cent of properties in Shatin offer price cuts, among the 30,00o-odd online listings maintained by Midland Realty. Prices at Kingswood Villas in Tin Shui Wai, among major housing estates, has weakened also more than 5 per cent since early August. A flat measuring 540 sq ft changed hands for HK$5.16 million last week. At HK$9,556 per sq ft, the price was 21 per cent below the original asking price in mid-2021. The Caribbean Coast in Tung Chung saw 14 transactions in the first 21 days this month, compared with only three deals in the same period last month, according to Ricacorp.