HONG KONG: Hong Kong’s private home prices lost steam in May after much of the pent-up homebuying demand was digested following the lift of all purchase curbs in the financial hub and property developers’ rush to sell new flats at steep discounts.
Home prices dropped 1.2% last month from April after rising for two months in a row, official data showed on Wednesday. The monthly gain in April was revised to 0.5%.
In late February, Hong Kong removed all additional stamp duties for foreign and second home buyers, as well as on those selling flats within two years of buying them, after prices had plunged 20% from their 2021 peak, hurt by higher mortgage rates, an outflow of talent and a weak market outlook.
The property market had immediately celebrated the end of those measures with a jump in transactions.
Despite a weakening home market, Hong Kong this month was again ranked by survey company Demographia as the least affordable city in the world for a fourteenth consecutive year.
Realtors expected prices would continue to soften until banks in the city start to cut interest rates.
New private home supply is expected to hit a 20-year high this year, following a record number of unsold homes in 2023, according to property consultancy Knight Frank.
“Until the unsold inventory drops … there may not be a rebound in home prices,” said Knight Frank senior director Martin Wong, who expected prices to fall 5% in 2024.
S&P also expected prices to further decline 5% to 10% this year, due to oversupply and high interest rates.
