New | Hong Kong home prices drop 3pc in November, biggest plunge since 2008
Experts warn of further price declines this year
Hong Kong’s official home price index dropped 3 per cent November on month, the biggest monthly fall since 2008, as industry experts caution that weakness in the local property market is likely to persist this year.
The Rating and Valuation Department’s monthly supplement released Friday, showed the general price index for private homes fell to 293.4 in November from 302.5 a month earlier. It reflected the first time the home price index has slipped below the 300 level since May last year.
“Home prices in the secondary residential market declined for four straight months since August and fell more sharply in November,” said Buggle Lau Ka-fai, chief analyst at Midland Realty.
He expects home prices could fall another 10 per cent this year as the uncertain economic outlook weighs negatively on demand.
“Individual owners have to offer their flats at reduced prices in order to lure buyers away from primary market,” he said.
The number transactions in the secondary market dropped 17.4 per cent in 2015 compared to a year earlier, for a total of 40,875 deals.
Lau believes the number of home sale in the second-hand market could rebound to 43,000 this year. But that is still 65 per cent less than 2010’s 123,995 deals, according to Midland.
Friday’s government data indicates flat prices fell across the board. Flats ranging in size between 753 to 1,075 sq ft registered the largest decline, easing 4.2 per cent to 259.5 in November from 279.9 in October.
Flats of this size in New Territories registered an average price of HK$7,894 per sq ft, or equivalent to levels seen in the third quarter in 2014, according to the data.
Flats smaller than 430 sq ft in Kolwoon dropped 5.1 per cent in November on month to an average HK$10,113 per square foot, while those in New Territories dropped 2.1 per cent to HK$9,363 per sq ft.
But home prices could continue falling as prospective buyers stayed on the sideline amid concerns that the rising interest rate cycle could trigger a sharper correction.
A 258 sq ft flat at Lee Bo Building in Tuen Mun changed hands for HK$2.05 million, or HK$7,846 per sq ft, according to agents.
“The owner had to reduce the asking price by HK$450,000 to find a buyer,” said a Centaline Property Agency spokesman.
According to data compiled by Midland, overall average home prices in Hong Kong were HK$10,267 per sq ft in December, down 6.4 per cent from the peak of HK$10,970 per sq ft in August.
In spite of the drop, home prices still rose 2.8 per cent last year, the agency said.
The Rating and Valuation’s rental index fell 1.02 per cent month on month to 173.7 in November after peaking in September.
A 570 sq ft flat at Nan Fung Sun Chuen, Quarry Bay rented for HK$16,000 per month after the owner dropped the monthly charge by HK$2,000.