© Reuters. FILE PHOTO: An aerial view shows Choi Hung public housing estate and other residential buildings with the Lion Rock peak in the background, in Hong Kong, China June 3, 2021. REUTERS/Joyce Zhou/File Photo
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HONG KONG (Reuters) – Hong Kong private home prices dropped 3.3% in November to the lowest since August 2017, official data showed on Wednesday, as its housing market – one of the most unaffordable in the world – is set to post the first annual drop since 2008.
Prices in the Asian financial hub were weighed down by a weak economic outlook and rising mortgage costs, following a serious COVID outbreak at the beginning of the year.
November’s fall in home prices came after a revised 2.7% drop in October. Home prices in Hong Kong have fallen 13.8% in the first 110 months of the year.
Transaction volume for the year is expected to fall to a decade low but it could have a small bounce next year after authorities lift travelling restrictions with mainland China, property agents said.
For 2023, real estate consultancy Cushman & Wakefield (NYSE:CWK) expects home prices to be 0-5% lower than this year, with prices stabilizing in the second half after an expected peak of interest rates.
Another consultancy, JLL, expects prices to fall another 10% next year for the mass market. It said a high level of inventory for developers due to a surge in unsold units this year would drive developers to offer discounts.
The selling prices of some recently launched projects were 7% to 13% lower than the average price of the secondary market in the same area, JLL added.
Last week, major developer CK Asset Holdings, owned by the city’s richest man Li Ka-shing, won a residential land plot in the downtown Kai Tak area for a price much lower than market expectations. Surveyors said the floor price represented an eight-year low in the area.