Hong Kong home prices drop for fourth straight month in August

Boc Hong Kong Holdings

26/09/2024 04:06

HONG KONG, Sept 26 (Reuters) - Hong Kong's private home
prices dropped for the fourth consecutive month in August,
official data showed on Thursday, as potential buyers remained
on the sidelines ahead of interest rate cuts. 
    
    WHY IT'S IMPORTANT
    The market is watching whether the interest rate reduction
announced by Hong Kong banks last week will give a boost to the
struggling property market in one of the world's most
unaffordable cities.     
    Demand has lost steam since May after a short-lived bounce,
thanks to the lifting of all property purchase curbs in
February, as realtors said much of the pent-up homebuying quest
has been sated, while property developers launched new flats at
steep discounts to boost sales.     
    
    BY THE NUMBERS
    Home prices fell 1.71% in August from July, following a
revised 1.75% drop in July.
    The prices have dropped 6.2% so far this year.
    They have tumbled 26.6% from their 2021 peak, staying at
their lowest level since September 2016, hurt by higher mortgage
rates, an outflow of talent and a weak market outlook.
    
    MARKET COMMENTS
    Knight Frank Senior Director Martin Wong said he expected
prices could be bottoming in the third quarter after the
September rate cut and stay low in the fourth quarter. 
    JLL Hong Kong Chairman Joseph Tsang said he saw prices to
decline this year, as developers are likely to rush to launch
new projects in response to the rate cut with competitive
prices.
    Morgan Stanley in a research note forecast a 5% home price
recovery in 2025 helped by U.S. rate cuts, following an 8% drop
in 2024.
    
    CONTEXT
    Hong Kong's major banks including HSBC  0005.HK  and Bank of
China (Hong Kong)  2388.HK  surprised the market last week by
cutting their best lending rate in the city by 25 basis points,
following the U.S. Federal Reserve's interest rate cut.   
    Hong Kong's monetary policy moves in lock-step with the
United States as the city's currency is pegged to the greenback,
but local banks make their own rate decisions depending on their
funding costs. 

 (Reporting by Clare Jim; Editing by Rashmi Aich)
 ((clare.jim@thomsonreuters.com;))