Worst month since 1991: new home sales in Hong Kong plunge 80 per cent in January

The recent withdrawals of government land sales as a result of poor bids and the return of negative-equity homeowners are adding to strains in a rapidly weakening Hong Kong property market, with analysts saying developers will be forced to cut prices aggressively to stay afloat.

Centaline Property Agency estimates total property transactions in Hong Kong in January was on track to register its worst month since 1991, when it started compiling monthly figures.

Total transactions are likely to have hit 3,000, it said in a survey released on Sunday. With developers slowing down new launches, only 394 units were sold in the first 27 days of January, 80.3 per cent lower than the 2,127 deals lodged in December. Meanwhile, sales of used homes fell by a fifth to 1,276 deals in January.

The government will announce the official data in the coming days.

A similar picture emerges from another survey by Ricacorp Properties, which shows 2,908 deals were lodged with the Land Registry in the first 28 days of January.

READ MORE: Hong Kong sees spurt in negative-equity home owners as property prices tumble

Analysts said developers slowed down new launches after the US implemented its first interest rate in a decade. Hong Kong commercial banks are expected to follow suit in the coming months, pulling up mortgage rates.