Homeowners slash prices by up to 16 per cent as ‘fear’ grips Hong Kong in wake of prime rate hike
Higher mortgage rated unveiled by 11 local banks were followed by at least five homes being unloaded at discounts of up to 16 per cent on Thursday
Fears of a drop in home prices are growing in the world’s least affordable housing market as at least five homes were unloaded at discounts of up to 16 per cent on Thursday, following higher mortgage lending rates unveiled by 11 local banks.
In anticipation of higher prime lending rates, more than 10 local homeowners reduced their asking prices by at least HK$1 million (US$127,951) in the last few days.
One 735 square foot flat at the Metro City development in Tseung Kwan O was sold for HK$10.48 million on Thursday, down 16 per cent or HK$2 million from the asking price of HK$12.5 million.
“Hit by the rise in the prime [lending] rate, the market is expecting home prices to drop,” said Monne Yeung, branch manager of Centaline Property Agency.
Roy Lam, regional associate director at Centaline, brokered the sale on Thursday of a two-bedroom 399 sq ft flat at Fanling Town Centre, which sold for HK$5.3 million after price reductions totalling HK$202,000, or about 4 per cent of the flat’s value.
Homeowners are accepting greater discounts to asking prices after the interest rate rise
“Homeowners are accepting greater discounts to asking prices after the interest rate rise, which generally ranges from 2 to 8 per cent,” Lam said. “Homeowners believe the rise in the prime rate among local banks will hit home prices.”