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Hong Kong house prices pressured by high mortgage rates, unsold stocks

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Hong Kong’s lived-in home prices decline in August for the fourth straight month, as elevated interest rates and high inventory levels weigh

High interest rates, lack of purchasing power and growing inventory of unsold flats continue to exert downward pressure on property pricesIt is widely expected that the city’s home prices are set to drop by about 5 per cent by the end of this year, after the latest round of mortgage rate increases made last weekBanking & financeSalina LiPublished: 1:33pm, 27 Sep, 2023Why you can trust SCMP

Hong Kong’s lived-in home prices declined for the fourth straight month in August, government data showed and analysts expect the easing trend to continue for the rest of the year given the elevated interest-rate environment and high inventory levels.

Prices fell 1.4 per cent month-on-month in August, according to an index compiled by the Rating and Valuation Department. The widely watched gauge slipped to 339.2 from 344.0 in July.

“High interest rates, lack of purchasing power and stockpiling of new flats have continued to push property prices downwards,” said Martin Wong, Knight Frank’s Greater China head of research and consultancy. He said that in such an environment the residential property sector will face strong headwinds for the rest of the year while forecasting a 5 per cent decline in average prices over the second half of 2023.

Wong said that although the US did not increase interest rates in September, the interest rate hike cycle is not yet over. He said the impact of interest rate hikes will start fading only in the second quarter next year amid expectations that mortgage rates in Hong Kong could still rise this year.

Knight Frank expects that in the short term, the average volume of first and second-hand transactions per month will hover around 3,000-3,500 cases, and that the property market will need a significant turnaround to erase the losses suffered this year.

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