Hong Kong Home Prices Decline

HONG KONG (Reuters) – Hong Kong’s home prices fell 0.7% in December and 7.1% in 2024, according to government figures, as the property market struggles to find a bottom despite interest rate cuts and government support measures.

By The Numbers

Private home prices fell 0.7% in December from the previous month, following a revised 0.03% rise in November and a 1% increase in October, data from the Rating and Valuation Department showed. Prior to October, prices had declined for five consecutive months.

For the full year of 2024, prices dropped 7.1%.

Why It’s Important

Home prices in Hong Kong, one of the world’s most unaffordable cities, have plummeted nearly 30% from a peak in 2021. This decline was initially driven by higher mortgage rates, reduced demand as many professionals left the territory, and a pessimistic market outlook.

Authorities have attempted to support the ailing sector in 2024 with measures such as lifting property purchase restrictions and relaxing down payment ratios. However, housing demand has remained weak, particularly in the secondary market.

Market Comments

Realtors predict that home prices in 2025 could rise or fall by 5%, depending on the pace of official rate cuts and the intensity of trade tensions between China and the U.S.

“With interest rates and housing inventory coming down, the second half of the year may see a more noticeable price rise,” said Martin Wong, director of real estate consultancy Knight Frank.

Context

Major banks, including HSBC and Bank of China (Hong Kong), lowered their best Hong Kong lending rate in December by 25 basis points for the third time this year, following the U.S. Federal Reserve’s actions. The territory’s currency is pegged to the U.S. dollar, but local banks set their own rates.