Dec. 2 (Bloomberg) -- Hong Kong’s home sales fell 79 percent last month, the biggest drop since at least 1996, as a recession and a falling stock market hurt demand.

The number of residential units changing hands in the city sank to 3,264 last month, according to a Land Registry statement today. That followed the largest drop since November 1999 in October. By value, residential sales fell 87 percent from a year earlier to HK$9 billion ($1.2 billion) last month.

A recession in Hong Kong and a 52 percent plunge in the city’s stock market this year have hurt home sales as people curb spending. HSBC Holdings Plc and Bank of China Ltd., the city’s two biggest home lenders, have also raised mortgage rates to maintain profitability, adding to pressure on property prices.

Luxury home prices have fallen 17.7 percent since June, according to realtor, Centaline Property Agency Ltd.

HSBC, the bank with the most branches in Hong Kong, increased its mortgage rates in the city the most since Asia’s 1997-98 financial crisis. The bank will charge 1.5 percentage point below its so-called best rate for mortgages above HK$1.5 million, spokeswoman Louisa Leung said. The discount, down from 2 percentage points, will bring HSBC’s home loan rates to about 3.5 percent, according to Bloomberg calculations.

To contact the reporter for this story: Patricia Kuo in Hong Kong at pkuo2@bloomberg.net.

Last Updated: December 2, 2008 06:15 EST