Double whammy of coronavirus and protests is about to send Hong Kong’s home prices plunging, say property analysts

The official price index for used homes dipped 1.7 per cent to 378.5 in December, under the weight of the protest movement

House prices are likely to drop 3 to 5 per cent in the three months to March because of the viral outbreak, says Derek Chan of Ricacorp Properties

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People queue outside a store to purchase surgical masks amid the coronavirus outbreak. Photo: Keith Tsuji/SOPA Images via ZUMA Wire/dpa

Published: 12:27pm, 31 Jan 2020Updated: 11:09pm, 31 Jan 2020

Hong Kong’s famously expensive home prices fell in December and are likely to slide further in the coming months as authorities try to bring the Chinese coronavirus under control, said property analysts.

The official price index for used homes dipped 1.7 per cent to 378.5 in December, according to the Rating and Valuation Department. The world’s most expensive housing market had already been under pressure from months of violent anti-government protests and the effects of China’s trade conflict with the US.

It was the biggest fall since September’s 1.8 per cent drop, and a reversal of November’s short-lived gain of 1.9 per cent after Chief Executive Carrie Lam relaxed mortgage restrictions and stimulated the market. The gauge still managed a gain of 5.3 per cent last year.

“In November, the social movement suddenly escalated, with fights at both Chinese University and Polytechnic University. So turnover got stagnant. Homeowners had to slash prices when offloading stock,” said Derek Chan, head of research at Ricacorp Properties, referring to when police and frontline protests clashed at a number of the city’s universities. “The impact was obvious and drastic. So December’s home price took a U-turn for a drop again.”

Transactions tend to be reflected in the official price gauge two to three weeks later because of the time they take to be registered in official records.

House prices are likely to see a bigger drop of 3 to 5 per cent in the three months to March because of the coronavirus, which has made turnover shrink again, said Chan. The extent and duration of the fall will depend on how the epidemic develops.

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