Hong Kong Property: Rising Rents and Falling Home Prices in August

Surge in Hong Kong Rents Amid Declining Home Prices

Residential rents in Hong Kong jumped to the fourth-highest level on record last month, while home prices for lived-in properties slumped to an eight-year low. According to data released by the Rating and Valuation Department, rents rose 1.13 percent to reach an index of 197.5 in August, marking a 6.8 percent increase from a year earlier.

Analysis by Property Consultancies

Secondary home prices also faced a decline, sinking 1.72 percent month on month to an index reading of 292.1, the lowest since August 2016. Analysts suggest that the market has not yet adjusted to the recent half-point interest rate reductions by the US Federal Reserve and the Hong Kong Monetary Authority.

• Forecasts indicate that home prices may stabilize soon, despite initial declines.
• Ricacorp Properties estimates a 9 percent rise in rents this year.
• The August index is mere points away from the historic high of 200.1 recorded in August 2019.

Market Influences and Seasonal Trends

According to Eddie Kwok of CBRE, the summer season typically drives an uptick in accommodation demand due to incoming university students. This demand has led some developers to shift strategies, opting for leasing over sales.

Sales Slowdown Amid Rental Demand

The surge in HK rents contrasts sharply with a slowdown in home sales, which fell 1.9 percent to 3,654 units in August. Developers are now offering more incentives to stimulate the market, and the inventory of unsold flats is reported at 22,300 as of July, an increase from earlier this year.

• Future home price trends remain cautious, with predictions of a further 1 percent decline.
• Major banks in HK have reacted to the Fed's rate cut, which may boost market activity.