Hong Kong index of lived-in home prices fell in May and could decline further in June amid high supply of new flats, interest rate rise concerns
- Index of lived-in home prices dipped 0.3 per cent in May, according to data released by the Rating and Valuation Department on Tuesday
- The decline may widen slightly to 0.5 per cent in June, Ricacorp executive says
The prices of lived-in homes in Hong Kong fell in May, a decline that could have stretched into the past month, as homeowners are offering more discounts amid a high supply of new developments and concerns about rising interest rates.
The Hong Kong Monetary Authority (HKMA), the city’s de facto central bank, has raised rates in tune with the US Federal Reserve. Based on the current Hibor, or the Hong Kong Interbank Offered Rate, the actual mortgage interest rate for some mortgages has risen to more than 2.1 per cent, a more than two-year high.
Hong Kong’s commercial banks have, however, kept their prime rates unchanged after the HKMA’s most recent rate hike, which has kept the interest rate on prime-based mortgages unchanged. People are, therefore, snapping up property before the banks eventually do raise their prime rates.
A 731 sq ft flat at St Barths in Ma On Shan, for instance, last week changed hands for HK$13.7 million (US$1.75 million), or a loss of HK$1.02 million over four years, according to agency Century 21 Goodwin.