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Cheryl Arcibal

Negative equity cases in Hong Kong’s real-estate market hit a new high, according to official data released on Wednesday, as elevated interest rates continued to weigh on property prices.
The number of homes whose value sank below what their owners were paying for their mortgages rose 6.1 per cent to 40,741 cases in the first quarter from the preceding period, data from the Hong Kong Monetary Authority (HKMA) showed.
The tally was the highest on record since the fourth quarter of 2003, according to mortgage brokers.
The value of the negative equity cases rose by 5.5 per cent to around HK$205.9 billion (US$26.5 billion). It was also the second-highest value of negative equity cases since the HK$207.5 billion that was recorded in the third quarter of last year.
“Residential property prices fell 1.7 per cent during the period and the increase in negative equity cases was expected,” a HKMA spokesman said.
“The asset quality of the banking sector’s residential mortgage loans remains good,” the spokesman said.
“By the end of March 2025, the overall mortgage loan delinquency rate was only 0.13 per cent and the delinquency rate of negative asset cases was only 0.17 per cent, maintaining a low level. This reflects that the vast majority of mortgage loan borrowers can repay on time and the risks of bank mortgage businesses are controllable.”
Hong Kong’s lived-in home prices declined 0.49 per cent in March, according to an index published by the Rating and Valuation Department on Monday, following a 0.56 per cent decline in February. The index had retreated by 1.7 per cent as of the end of the first quarter to a level last seen in July 2016.
The falling home prices were attributed to caution among homebuyers amid a trade war between the US and China and uncertainty about the path forward for global interest rates.
Since the city’s housing market peaked in September 2021, prices of lived-in homes have slumped 28.6 per cent as social unrest and the Covid-19 pandemic sent the local economy into the doldrums. US President Donald Trump delivered his promised tariffs on April 2.
The HKMA spokesman said the negative equity cases mainly involved loans under a mortgage insurance scheme, which generally have higher loan-to-value ratios.
The number of negative equity cases was likely to rise in the second quarter, said Eric Tso Tak-ming, chief vice-president of mortgage broker mReferral.
“The vast majority of homeowners still have stable repayment capabilities and banks’ lending risks are manageable,” Tso said. “Property prices are expected to remain soft in the second quarter and the number of negative equity cases is likely to increase.”
“Prospective homebuyers should carefully assess their financial situation and repayment capacity, avoid overleveraging, ensure timely mortgage payments and set aside at least six months’ worth of emergency funds,” he said.
Property prices are expected to stabilise as the US Federal Reserve is tipped to cut interest rates in June, said Ivy Wong Mei-fung, managing director of Centaline Mortgage Broker.
The interest rate cut will “prompt more buyers to switch from renting to buying, which will help support the stabilisation of housing prices,” Wong said. “It is expected that the negative asset figure will turn around and fall again in the future.”
For potential homebuyers, Wong added that it was important to make their payments on time.
“Before entering the market, buyers should first assess their ability and stability to make sustainable payments and set aside no less than six to nine months of mortgage reserve funds to cope with sudden changes in financial conditions,” she said.
“When planning a home purchase budget, it is ideal for the total monthly payment to be no more than 40 per cent of income.”
Meanwhile, mortgage applications in March rose by 29.3 per cent to 8,456 from February, the HKMA data showed. Approved mortgage loans fell 5.3 per cent to HK24.7 billion.


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Negative equity cases soar to highest level since at least 2003 amid rising interest rates; experts advise caution for potential buyers


Negative equity cases soar to highest level since at least 2003 amid rising interest rates; experts advise caution for potential buyers.
