Hong Kong Aug home prices drop for third month, steeper declines forecast

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HONG KONG (Reuters) – Hong Kong private home prices fell for the third straight month in August, according to government data released on Monday, as increasingly violent street protests take a toll on the economy.

Prices dropped 1.37%, steeper than July’s revised 0.10% fall, and June’s 0.3% decline. It was the biggest percentage decline since December 2018, when prices dropped 2%.

Derek Chan, head of research at property agent Ricacorp, said the fall was within expectations.

“Home prices in September are set to fall more steeply and we may see a drop of about 2%,” Chan said, adding anti-government demonstrations and the ongoing Sino-U.S. trade war were pressuring the market.

Prices still managed to gain 8.5% in the first eight months, although analysts and property agents are forecasting anything between a rise of 5% to a drop of 5% for full-year prices.

“The property market performance this year will depend on the situation of Sino-U.S. trade tension as well as the local economy and social conditions,” said Thomas Lam, executive director of Knight Frank.

Adrian Cheng, executive vice-chairman of New World Development, said at the group’s results press conference last week he expected a high single-digit fall in this correction.

Hong Kong’s open economy is pressured by the year-long U.S.-China trade war and social unrest since mid-June over a now-withdrawn extradition bill that would have allowed people to be sent to mainland China for trial in Communist Party-controlled courts.

But the housing sector has been more resilient than others, with new launches this month selling most or all apartments as tight supply continues to keep prices high.