Hong Kong developers exercise caution in pricing new projects after housing transactions fall for second month amid rising interest rates
- Land Registry says the total value of housing transactions dropped by 25 per cent in July, while the total number of deals declined by 23.9 per cent
- The drop reflects home-buying sentiment, which has been hurt by US interest rates rising fast and sharply, Centaline executive says
Also on Tuesday, the city’s Land Registry revealed that the total value of transactions involving residential units dropped by 25 per cent to HK$33.9 billion in July, while the total number of deals declined by 23.9 per cent to 3,671. The value and volume of flat sales have now fallen for two consecutive months.
“Both the value and number of deals declined to their lowest level since March,” said Wong Leung-sing, senior associate director of research at Centaline Property Agency. In March this year, the total value of residential transactions stood at HK$26.9 billion, while the total number of deals was 2,869. “The drop reflects home-buying sentiment, which has been hurt by US interest rates rising fast and sharply,” he added.
Hong Kong homeowners have been feeling the pain of higher borrowing costs as the Federal Reserve has raised rates four times since March this year.
Mortgage payments linked to the Hong Kong interbank offered rate (Hibor) have risen since March – the one-month Hibor rose to 1.33 per cent last Thursday, its highest level in the past two years, after the Fed increased interest rates by 75 basis points for a second straight month the same day. The effective mortgage rate – 1.3 percentage points above Hibor – rose from 1.43 per cent in January to about 2.5 per cent on Tuesday.
