Hong Kong Feb home prices drop to 13-month low, hit by new Covid wave

Hong Kong private home prices dropped at a faster pace in February to their lowest since January 2021, official data showed on Tuesday, as the Asian financial hub was hit by a new wave of COVID-19 infections.

Prices declined 2.08% last month, according to the data, the biggest drop since November 2018, and compared to a revised fall of 0.89% in January.

Hong Kong, a major regional financial hub, this month was again ranked by survey company Demographia as the world's most unaffordable housing market for the 12th consecutive year.

Home prices started consolidating after reaching an all-time high in September. They have stayed largely resilient during the mass protests that convulsed the city in 2019 and through the pandemic over the past two years, supported by robust demand and lower interest rates.

The pace of price declines accelerated last month as COVID-19 infections surged and the government rolled out some of the most stringent social restrictions in the world since January, affecting many businesses and driving property agents to lower their full-year price forecast.

Real estate consultancy Cushman & Wakefield expected home transaction volume would drop nearly 50% in the first quarter from a year ago, to the lowest since 2016, but it would recover in the second half if the pandemic is brought under control before mid-year.

The firm expected growth in home prices of 0-3% for the whole of 2022.

The government's move to ease the mortgage ratio last month has helped to stimulate some home purchase demand as the city is set to gradually open up, realtors said, with transactions of small to medium sized apartments picking up in the past couple weeks.

Hong Kong reported 7,685 new COVID-19 infections on Monday, the third day in a row below 10,000 cases, and the government announced last week an easing of restrictions from April.

($1 = 7.8283 Hong Kong dollars)

(Reporting by Clare Jim; Editing by Shri Navaratnam)