Hong Kong home prices slump to the lowest level in 8 years, but rents rise

Hong Kong’s lived-in home prices fell by about 1.7 per cent in September to their lowest level since August 2016, as the impact of interest-rate cuts has yet to filter through to the faltering property sector, according to the latest official data.

Home prices fell for a fifth straight month, taking the 12-month decline to 12.5 per cent, according to data from the Rating and Valuation Department on Tuesday. Prices have slumped 7.5 per cent so far this year.

Meanwhile, home rents continued to increase, rising by 0.1 per cent month on month and 5.8 per cent year on year. Rents have risen by about 5.4 per cent this year. The current rental index reading of 196 is just four points shy of the 200.1 peak recorded in September 2019.

The latest home prices and rents only partially reflect the rate cut initiated by the Hong Kong Monetary Authority (HKMA) on September 19. The HKMA followed the rate cut by easing mortgage financing requirements, raising the mortgage borrowing limit and increasing the debt servicing ratio to 50 per cent from 40 per cent for all properties.

“The government’s various accommodative measures, including relaxing the maximum loan-to-value ratios for property mortgage loans have helped stabilise residential prices,” said Eddie Kwok, executive director for valuation and advisory services at CBRE Hong Kong. “As such, we may see residential prices bottoming out in the near term.”

The government’s drive to attract more talent to Hong Kong is also likely to keep rents on an upward trend.

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