Hong Kong market will be unkind to old mass housing estates as prices slide in early weeks of 2022

Name: Coronavirus: ‘exponential’ outbreak of Omicron triggers lockdowns in Hong Kong housing blocks
Uploaded: 2022-01-25T00:30:17.000Z
Duration: 3 min 1 s
Description: Coronavirus: ‘exponential’ outbreak of Omicron triggers lockdowns in Hong Kong housing blocks

Large developments built more than 20 years ago in Kowloon and Hong Kong Island are likely to experience bigger declines

Covid-19 infections and emigration have been cited as reasons for caution in the market outlook this year

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An aerial view of the South Horizons private housing estate in Ap Lei Chau, Aberdeen district. Photo: Winson Wong

Lam Ka-sing

Published: 8:30am, 25 Jan 2022Updated: 8:57am, 25 Jan 2022

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.

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Coronavirus: ‘exponential’ outbreak of Omicron triggers lockdowns in Hong Kong housing blocks

“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.

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.