Hong Kong Home Prices Fall to 9-Year Low as Trade War Dims Outlook

Hong Kong home prices fell for a fourth straight month in March, dropping 0.49 percent from February to drag an official index to the lowest level in nearly nine years despite a rebound in transactions.

Home prices fell 7.8 percent from a year earlier to reach a level last seen in July 2016, according to an index published by the city’s Rating and Valuation Department on Monday. Average home prices in the city are now down 28.6 percent from their 2021 peak, according to the department.

While recent policy measures brought more buyers into the market in March, analysts see the US-China trade war dimming the market outlook, with Knight Frank predicting that home prices will drop by 2 to 3 percent in the first half of this year.

“Looking ahead, the escalating US tariff policy is negatively impacting homebuyer sentiment in Hong Kong,” Knight Frank said in a commentary on Tuesday. “Amid macroeconomic uncertainties and currency depreciation risks, buyers are likely to be more cautious, potentially delaying purchases. The erratic stock market has also dampened investment confidence.”

Prices To Keep Falling

The decline in home prices came despite a government move in February to cut the stamp duty for home transactions under HK$4 million in February, with that policy change following its lift of all curbs on property purchases last year and lowering down payment requirements.

The policy changes, along with steep discounts from developers, have helped lure bargain hunters into the market, with JLL noting that the 12,193 homes sold across Hong Kong’s primary and secondary housing markets in the first quarter represents a more than 24 percent increase from the same period last year.

Despite the deal surge, the property consultancy’s data showed that capital values in Hong Kong’s mass residential market fell 0.1 percent in the first quarter from the preceding three months. The deal total for the period was down 19.2 percent from the fourth quarter of 2024.

“The US tariffs and the US-China trade war continue to evolve. The full impact may take time to become visible as economic effects materialise gradually and the situation unfolds,” JLL Hong Kong chairman Joseph Tsang said in a statement late last month.

The property firm is maintaining its earlier forecast of a 5 percent decline in Hong Kong residential capital values this year, with Tsang pointing to the trade war as a potential source of fresh housing demand in the city saying, “this situation may trigger a trend of RMB depreciation, potentially attracting mainland Chinese capital into Hong Kong’s residential market.”

More Homeowners Under Water

While authorities last year lowered downpayment requirements, some potential buyers may be finding this policy move to be a source of risk as figures from the Hong Kong Monetary Authority released on Wednesday showed a record number of homeowners now owing banks more than their homes are worth.

The city had 40,741 residential mortgage loans in negative equity at the end of March, up 6.1 percent from 38,389 at the end of 2024, the HKMA said in a press release.

The number of negative equity cases was the highest in more than 20 years, according to banking sources and was up more than 21 percent from 32,073 at the end of March 2024, HKMA figures showed.

The value of negative equity cases rose 5.5 percent to HK$205.9 billion ($26.6 billion) on 31 March from HK$195.1 billion at the end of last year, the city’s de facto central bank said.