Hong Kong’s housing deals hit a 26-month low in March, are expected to bounce back in April as fifth Covid-19 wave recedes

Buyers feared a further fall in home prices amid worsening Covid-19 situation, delayed their purchases in first quarter, Centaline executive says

City’s total number of transactions including those of homes, shops, industrial units and car parking spaces also hit a 26-month low in March

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Market observers say more buyers could be expected to enter the market to snap up cheap homes after some signs of improvement in the fifth wave. Photo: AP

Published: 8:30am, 5 Apr 2022

Housing transactions in Hong Kong hit a 26-month low in March because of higher borrowing costs and a devastating fifth wave of the coronavirus pandemic.

In fact, the city’s total number of transactions including those involving homes, shops, industrial units and car parking spaces also hit a 26-month low in March. This number dropped to 3,828 deals valued at HK$34.8 billion (US$4.4 billion) last month, representing a month-on-month decline of 3.4 per cent, according to Midland Realty data.

“Buyers delayed their purchases out of fear of a further fall in home prices amid the city’s worsening Covid-19 situation. As a result, we saw the market become dormant in the first quarter,” said Wong Leung-sing, senior associate director of research at Centaline Property Agency.

The city has been battling an exponential surge in Covid-19 infections since late February. With about 8,200 deaths as of April 4, the city’s mortality rate is among the highest globally. Meanwhile, its strict Covid-19 containment measures have become too much to bare for foreign nationals and firms, and have led to an exodus of expats, which has worsened a slide in home prices across the city.

An index of Hong Kong’s lived-in home prices dropped to a 13-month low after falling 2.1 per cent to 382.1 points in February, shows data published by the Rating and Valuation Department on March 29.

Last week, Goldman Sachs lowered its forecast, from flat prices this year, followed by 5 per cent declines in 2023 and 2024 and a return to flat prices again in 2025, with a 5 per cent decline each year between 2022 and 2025. “This cumulative 20 per cent price fall from year-end 2021 levels would be enough to compensate for the 230 to 240 basis points higher borrowing costs, as it restores affordability along with an expected pickup in household income of 10 to 15 per cent by then,” the bank said in a report published last Monday.