Hong Kong house costs drop 2.3% in August to lowest in 3-1/2 years By Reuters

HONG KONG (Reuters) – Hong Kong personal house costs fell 2.256% in August from a month earlier to the bottom since February 2019, official information confirmed on Wednesday, as market sentiment was harm by rising rates of interest.

The drop in house costs in one of many world’s most unaffordable housing markets final month adopted a revised 1.44% decline in July.

Dwelling costs within the monetary hub have fallen 6.5% within the first eight months of this yr. The property value index was at 368.2 in August, slipping from an all-time peak of 398.1 in September final yr.

Rising mortgage prices and a bleak financial outlook have deepened pessimism amongst householders, whereas house costs for the full-year are anticipated to drop round 10%, the primary fall since 2008.

Hong Kong banks raised their greatest lending price by 12.5 foundation factors final week, the primary price hike in 4 years, following the U.S. Federal Reserve’s third straight price enhance of 75 foundation factors.

JP Morgan head of Asia property analysis, Cusson Leung, mentioned the smaller-than-expected price hike was a constructive however the property market would possible proceed to melt in 2023 on account of a weak world economic system.

Nonetheless, he anticipated the decline to be average.

“To ensure that sentiment to show round, we might want the assistance of a greater economic system and a greater inventory market,” Leung mentioned, including {that a} reopening of the border with mainland China would additionally increase demand.

Hong Kong monetary chief Paul Chan mentioned final week he didn’t see a pointy threat to the town’s actual property market nor a necessity to regulate property management measures.

Hong Kong’s de facto central financial institution final week relaxed a mortgage stress take a look at requirement following the perfect lending price hike, serving to property patrons to borrow extra from banks.