Hong Kong homes still costly despite slow sales

The housing market is showing signs of softening but prices remain high on a key affordability measure, the Hong Kong Monetary Authority says.

The house-price-to-income ratio reached 14.6 in the third quarter, a level comparable to the 1997 market peak, the HKMA said in its quarterly bulletin. The income-gearing ratio stayed well above its long-term average of 50 per cent, it added.

"The gap between rental yield and interest rate also shrank considerably, making property investment less attractive," the de facto central bank said.

The housing market has been quiet since the third quarter of this year. After falling sharply in the second quarter, property trading activities remained at a subdued level of about 3,600 transactions a month, compared with the monthly average of 6,800 last year, the HKMA said.

The market had seen some pick-up in sales of new homes recently but, on the whole, it remained weak compared with last year, it said.

The Centa-City Leading Index of home prices fell 0.29 per cent week on week to 118.61 on Friday. Year-to-date price gains stand at 2.6 per cent. The index's intra-year peak of 123.66 was recorded in March.