Hong Kong property market favours bargain hunters as prices drop, with 1 in 10 home sellers in August incurring a loss
- The ratio of second-hand housing deals yielding capital gains has fallen by 6.8 percentage points since last year to below 90 per cent in August
- Among 56 developments at railway stations, 30 saw the price per square foot decline in August, according to Centaline
Hong Kong homebuyers with tight budgets may be able to take advantage of a downturn to find bargains – even flats being offered at a loss – as a looming prime rate hike and an ongoing wave of emigration continue to depress sales.
Upwards pressure on local interest rates is inevitable after the US Federal Reserve meeting in the United States later this week, said Sammy Po, CEO of Midland Realty’s residential division for Hong Kong and Macau.
“Many second-hand property owners are willing to cut prices to sell, which attracts buyers to take the opportunity to pick up bargains,” said Po.
If US interest rates increase by 1.5 to 1.75 per cent in total in September, November and December, home prices are likely to fall by as much as 8 per cent this year, so buyers can consider listings where the price has been cut by this much or more, said Eric Tso, chief vice-president at mReferral Mortgage Brokerage Services.
Hong Kong’s homeowners and potential buyers are bracing for higher mortgage rates as the Fed is expected to lift benchmark borrowing costs by at least 75 basis points this week, according to Fed funds futures, with some traders pricing a full percentage point increase. That is in addition to increases of 225 basis points in the past four federal open market committee meetings this year.