Number of Hongkongers ‘under water’ on their mortgages more than triples amid slumping home prices

Negative-equity loans soared to 11,123 cases in the third quarter, according to data released on Tuesday by the Hong Kong Monetary Authority

The number of Hongkongers holding ‘upside-down’ loans will only decline in the first half of next year at the earliest, analysts say

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A view of residential buildings in Hong Kong’s Mid-Levels neighbourhood on October 24, 2023. Photo: May Tse

Published: 7:36pm, 31 Oct 2023Updated: 7:59pm, 31 Oct 2023

Hong Kong’s sliding home prices have snared more mortgage borrowers in negative equity as the market value of their properties decreased at a faster rate than their loan balances, giving policymakers more cause for concern as they grapple to revive the city’s economy.

So-called upside down loans more than tripled to 11,123 cases in the third quarter, according to data released on Tuesday by the Hong Kong Monetary Authority (HKMA). The aggregate value of negative-equity loans also more than tripled to HK$59.3 billion (US$7.6 billion), compared with HK$17.4 billion at the end of June.

The jump reverses a decline seen in the first six months of 2023, when the number of cases nearly halved to 6,379 at the end of March from 12,164 in December 2022, and then nearly halved again to 3,341 at the end of June.

The number of Hongkongers “under water” on their loans will increase in the fourth quarter and will only decline in the first half of next year at the earliest, analysts said.

Evidence of falling home prices is seen in the window of a property agent in Tin Hau, Hong Kong, on October 28, 2023. Photo: Dickson Lee

“This is worrisome if we look at the aggregate value,” said Hannah Jeong, head of valuation and advisory services at Colliers Hong Kong. “It is almost double [the aggregate value] of the 2005 and 2008 slumps.”