Hong Kong’s Home Prices Fall to Six-Month Low on Economy, Centaline Says

Hong Kong’s home prices slid to the lowest in more than six months last week as the threat of an economic recession continues to dent buyer sentiment, according to the city’s biggest privately held realtor.

Prices fell 1 percent in the week ended Nov. 6, its fifth straight decline and the biggest drop in 17 weeks, Centaline Property Agency Ltd. said in an e-mailed statement today.

The value of housing transactions plunged 50 percent in October from the same month last year to HK$22.5 billion ($2.9 billion), after the government raised minimum down-payment requirements, boosted mortgage rates and increased land sales to curb a housing bubble. Hong Kong home prices may fall as much as 30 percent by 2013, according to Barclays Capital Research’s Andrew Lawrence.

“Looks like the downturn will last for a while,” said Wong Leung-sing, associate director of research at Centaline. “It won’t be a crash as during the Asian Financial Crisis, but if you look around there isn’t really anything that can help things turn around in the near term.”

The estimated number of mortgages in which the outstanding debt exceeded the value of the home jumped to 1,653 at the end of the third quarter from 48 three months earlier, the Hong Kong Monetary Authority said Oct. 28.

Hong Kong Chief Executive Donald Tsang said the city’s economy may have slipped into a recession in the third quarter as Europe’s debt crisis roiled markets. Growth may be as little as 2 percent next year after a likely expansion of 5 percent this year, Tsang said in an interview on Nov. 8. That would compare with a 7 percent gain last year.

The government’s property curbs came after prices soared more than 70 percent since early 2009, fueled by record low mortgage rates, a shortage of new housing supply and an influx of buyers from other parts of China. Tens of thousands of demonstrators marched July 1, the 14th anniversary of Hong Kong’s return to Chinese rule, in part to protest escalating housing and rental costs.

The Hang Seng Property Index, which tracks the performance of the city’s seven biggest developers, has declined 22 percent this year, compared with the 17 percent drop in the benchmark Hang Seng Index.

To contact the reporters on this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net

To contact the editors responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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