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

FILE PHOTO: General view of an apartment building at the Tuen Mun neighborhood in Hong Kong, China, August 20, 2019. REUTERS/Kai Pfaffenbach

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Kong’s open economy is pressured by the year-long U.S.-China trade war and social unrest since mid-June over a now-withdrawn extradition bill that would have allowed people to be sent to mainland China for trial in Communist Party-controlled courts.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

Reporting by Clare Jim; Editing by Shri Navaratnam