Recent Hong Kong homebuyers stand to lose millions as prices decline – some already have

Many people who bought homes over the past five years are now facing a loss – at least on paper – as prices continue to slide

Some owners who had to sell have taken significant losses – in one case to the tune of HK$5.85 million (US$745,334)

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The Harbour Glory development in Hong Kong’s North Point district, where one seller recently absorbed a loss of nearly HK$6 million on a flat bought in 2017. Photo: Handout

Published: 8:30am, 14 Sep 2022Updated: 11:02am, 14 Sep 2022

Many homeowners who bought flats in Hong Kong over the past five years are looking at a loss if they decide to sell now, as the housing market enters a downward cycle amid rising interest rates, a recession and a wave of emigration.

In fact, some owners who bought high have been forced to sell low recently, turning paper losses into real losses – in one case to the tune of HK$5.85 million (US$745,334).

Many homeowners who bought homes after mid-2017, when prices were higher than the current level, may find themselves in the same position if they choose to sell, said Derek Chan, head of research at Ricacorp Properties. A total of 327,419 private homes fall into that category, according to Land Registry data compiled by Midland Realty.

“Negative factors such as the US-China trade war, social unrest, Covid-19, and rising interest rates have caused property prices to soften,” said Chan. “Therefore, those who entered the market at a high price in the past few years have a high chance of experiencing paper losses.”

For most of 2018 and 2019 the government’s index of lived-in home prices ran higher than the latest reading of 376.1 in July this year, according to official data released by the Rating and Valuation Department. For example, the index is now 5.2 per cent below the 396.9 it registered in May 2019, before the outbreak of social unrest and the coronavirus pandemic.

Recent Hong Kong homebuyers stand to lose millions as prices decline – some already have

Many people who bought homes over the past five years are now facing a loss – at least on paper – as prices continue to slide Some owners who had to sell have taken significant losses – in one case to the tune of HK$5.85 million (US$745,334)

Many people who bought homes over the past five years are now facing a loss – at least on paper – as prices continue to slide

Some owners who had to sell have taken significant losses – in one case to the tune of HK$5.85 million (US$745,334)