Hong Kong home prices hit lowest level in more than 2 years, may lose another 10 per cent amid rising interest rates

Home prices fell 1.6 per cent in July and have dropped 4.5 per cent this year, according to the government’s index

Prices could sink an additional 10 per cent this year amid buyer hesitancy linked to interest rates, analysts say

Reading Time:3 minutes

A woman walks past a real estate agent’s office in Hong Kong. Prices hit the lowest level since February 2020 in July. Photo: AFP

Published: 4:14pm, 29 Aug 2022Updated: 4:17pm, 29 Aug 2022

Hong Kong home prices fell by 1.6 per cent in July, sinking to a nearly two-and-a-half-year low amid rising interest rates and Covid-19 rules that continue to weigh on the city’s economy and the property market.

The trend is likely to continue, with one analyst predicting prices could drop as much as another 10 per cent through the rest of the year.

The government’s index of overall home prices in the city, released on Monday by the Rating and Valuation Department, dropped to 376.1 in July from 382.4 in June.

So far this year, home prices have tumbled 4.5 per cent, and the July reading is only slightly above the 373.4 recorded in February 2020. July was also the third consecutive month that prices of lived-in homes declined.

A construction site in the Diamond Hill area of Hong Kong, pictured on December 8, 2021. Photo: SCMP / Dickson Lee

The Hong Kong economy slipped into a recession in the second quarter, contracting by 1.4 per cent after slumping by 3.9 per cent in the previous quarter.