HONGKONG (Reuters) – Hong Kong private home prices dropped at a faster pace in September, marking the fourth consecutive month of decline, according to government data released on Thursday, as the financial city was hit by a political turmoil.
The price drop of 1.8%, in one of the world’s least affordable property markets, compared with August revised decrease of 1.4%.
“The fall percentage was in line with expectation,” said Thomas Lam, executive director of Knight Frank. “I expect the index may still correct downward in the next two or three months.”
Lam also expected prices to continue falling next year for another 5%, but a low interest rate environment will provide support.
HSBC <0005.HK> on Thursday said it will cut its Hong Kong best lending rate by 0.125 percentage points, following U.S. Fed’s rate cut.
The Asian financial hub has been hit this year by the U.S.-China trade dispute and five months of often violent anti-government protests.
However, the Chinese-ruled city’s sky-high property prices have stayed relatively resilient compared with the tourism and retail sectors amid the latest crisis.
Hong Kong’s home prices have still recorded a rise of 5.9% so far this year.
Analysts and property agents, however, expect the home prices to flit between a gain of 5% and a drop of 5% over the remainder of this year.
In September, a flat of 60 square metres (646 square ft) on Hong Kong Island cost an average of HK$10.4 million ($1.33 million), according to official data.
The head of Hong Kong’s central bank called on the public to manage financial risks prudently on Thursday, as the local economy faces its first recession in a decade.
Hong Kong’s leader Carrie Lam expanded borrowers’ power mid-this month by reducing the size of down payments required for home purchases for small-to-medium flat, resulting in a surge in transaction volumes in the secondary market in the last two weeks despite a slowing economy.
($1 = 7.8355 Hong Kong dollars)
(Reporting by Clare Jim; Editing by Sherry Jacob-Phillips)