Hong Kong Home Prices Fall Most in 3 Years on Curbs, Rates

Hong Kong home prices fell the most in almost three years after the government imposed its harshest measures yet to curb prices and as the city’s lenders raised mortgage rates for the first time since 2011.

Prices fell 1.41 percent in the week ended April 14, the fourth-straight weekly decline, according to an index compiled by Centaline Property Agency Ltd., Hong Kong’s biggest closely held realtor. It was the biggest drop since May 2010, the company said in an e-mailed statement.

Before February’s measures, a housing shortage, low mortgage costs and buying by mainland Chinese helped prices more than double since the start of 2009 even as policy makers attempted to rein in gains amid an outcry over affordability. The government on Feb. 22 doubled the stamp duty on all property transactions higher than HK$2 million ($257,000), while the Hong Kong Monetary Authority told banks to maintain the risk weighting for new home loans at a minimum of 15 percent to help protect them against a drop in home values.

“The second-hand market has halted almost completely,” Wong Leung-sing, an associate research director at Centaline, said in today’s statement. “The negative impact of the doubled stamp duty and tighter mortgage rules is now spreading.”

Prices could fall as much as 20 percent over the next two years, according to Deutsche Bank AG, after lenders raised home-loan rates in response to the tighter risk rules.

HSBC Holdings Plc and Standard Chartered Plc were among banks that last month raised mortgage rates by 25 basis points, the first increase since November 2011.

Hong Kong has the highest home prices among major global cities, including London, New York, and Tokyo, according to a report by Savills Plc in March.

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