Hong Kong home prices contract for a fifth straight month in February

Hong Kong home prices fell for a fifth consecutive month in February, bringing the accumulative decline since the September peak to 10.9 per cent, according to government data.

The Rating and Valuation Department’s monthly supplement released on Thursday showed the general price index for private homes was 272.8 in February , the lowest figure since October 2014.

But industry experts say home prices have not found a floor yet as the bleak economic outlook and an ample supply pipeline of new flats could dent demand.

“Several new projects are lining up for pre-sale over the next three months. Developers are expected to undercut second-hand prices to speed up sales and it will add further downward pressure on secondary home prices,” said Buggle Lau, chief analyst at Midland Realty.

Prices at 100 housing estates monitored by Midland Realty showed prices continued to fall in March with average transaction prices at HK$9,630 per square foot, down 2.2 per cent from February’s HK$9,855 per square foot.

He said home prices have dropped 12.2 per cent from August last year.

For the first three months this year, there were 5,267 transactions concluded in the secondary market with an estimated value of HK$38.82 billion, said Midland Realty.

That meant average the transaction price was HK$5.47 million in the first quarter, HK$1.09 million less than HK$6.57 million in the previous quarter.

“It is a new low since the third quarter 2014,” said Lau.

Rating and Valuation Department data indicates flats with size area of between 430 to 752 square feet in Hong Kong Island saw a month-on-month 8.9 per cent decline in February, the biggest fall across the board.

Centaline Property Agency said prices at major housing estates in Hong Kong Island - which cater to middle income families - registered the sharpest fall as they have cut their spending in anticipation of a possible salary cut.

Prices at South Horizons in Aberdeen dropped most with 18 per cent fall, followed by Taikoo Shing fall of 14.9 per cent, according to Centaline’s data.

But flats with sizes smaller than 430 square feet in the New Territories edged up 0.9 per cent to HK$8,953 per square foot in February after falling for seven consecutive months, according to Rating and Valuation.

Prices in this category have lost 16 per cent from the peak in July, government data showed.

Centaline said sales of mass homes have rebounded sharply in March as more owners are willing to offer steeper discounts to quicken the sale.

“More home seekers have returned to the market to look for bargains and this has boosted the number of transactions in the secondary market,” said Centaline Property Agency’s Residential Department Managing Director Louis Chan Wing-kit.

The home rental index also fell for a fifth month to 163.7, down 7.8 per cent from September’s peak.

Centaline Property Agency said rentals at Hang Fa Chuen registered the largest fall with s 16.9 per cent decline from September, followed by Kornhill Garden’s 14 per cent fall and Taikoo Shing lost 13.8 per cent during the same period.