Hong Kong’s lived-in home prices to drop 5 per cent this year as sales sputter amid new-home glut, high interest rates: Knight Frank

Property consultancy Knight Frank joins JLL and Citi in predicting a decline in lived-in home prices

The company’s latest report cites a shrinking labour force as a significant historical indicator of falling home prices

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Residential buildings in Hong Kong, pictured on October 17, 2022. Photo: Bloomberg

Published: 8:00am, 23 May 2023Updated: 6:10pm, 23 May 2023

Another property consultancy has joined a growing chorus that believes lived-in home prices are destined to slide in Hong Kong as sales sputter after a recovery in the first quarter proved short-lived.

Knight Frank on Monday predicted a 5 per cent drop amid high interest rates, a glut of new homes potentially hitting the market and a shrinking labour force. The forecast followed predictions of a decline from both JLL and Citi.

“Overall, we believe this year’s home prices will be in the downward direction,” said Martin Wong, Knight Frank’s Greater China head of research and consultancy. “Buyers will find new homes more attractive than lived-in homes.”

The consultancy on Monday released its latest analysis of the factors that move the city’s home prices, based on more than 40,000 data points and multiple indicators over 25 years.

Multiple under-construction buildings wrapped in bamboo scaffolding in Hong Kong, pictured on April 28, 2023. Photo: AFP

“In a high-interest environment, a tough stress test is required for buying lived-in homes,” Wong said. “For new homes, there are often loans from the developers. This factor will affect the decisions of first-time buyers. Lived-in home prices will be under pressure.”