US and local major banks raise interest rates, significantly lowering the performance of the local property market. The Centa-City Leading Index (CCL), which reflects second-hand property prices, is at 162.88 points, down 1.54% week-on-week, the biggest drop since November 2022. CCL ended its 3-week rising streak and fell through 163 points, hitting a 26-week low and returning to the level in February this year.

Some market analysts pointed out that the supply of new flats and successive low prices to grab customers, the interest rate continues to be high, the economic recovery is not as expected, are the reasons for the sharp drop in property prices.

The Federal Reserve raised interest rates again at the end of last month by 0.25%, which is the 11th rate hike since March last year, with a cumulative increase of 5.25%; Hong Kong banks then also generally raised the prime rate (P) by 0.125%, and Hong Kong P cumulative increase of 5 times, with a cumulative increase of 0.875%.

Recently superimposed on a succession of new low prices to snatch customers, as well as the economic recovery is not as expected, the second-hand property market weaknesses, the transaction is low, etching letting cases increase, last weekend two days of the major agents of the top ten housing estates of the transaction of 3 to 8 cases.

Centaline Property Research Senior Associate Director Yang Mingyi yesterday pointed out that the overall property prices fell significantly this week, reflecting the market conditions during the week of the US and major local banks' interest rate hike on 27 July. With interest rates remaining high and the US reiterating that it will not cut interest rates this year, the atmosphere in the secondary market has been muted, resulting in further downward adjustments in property prices.

Yang Mingyi said, the secondary property market is still in a tug-of-war situation, which makes the overall property price adjustment slow, CCL earlier for 13 consecutive weeks in a narrow range of 165 to 168 points, the last 5 weeks is hovering at 162 points to 165 points, it is believed that the short-term property prices continue to fluctuate at the current level, CCL from the high of 168.40 points in April this year began to soften, the cumulative decline of the last 18 weeks of 3.28 per cent.

The leading index for large estates, CCL Mass, was at 162.99, down 1.72% week-on-week, while CCL (small and medium-sized flats) was at 161.73, down 1.60% week-on-week. CCL Mass and CCL (small and medium-sized flats) both hit 26-week lows, returning to the level in February this year. CCL (large flats) was at 168.66, down 1.24% week-on-week.

Property prices in the four districts recorded three falls and one rise. Hong Kong Island's property price index was at 165.96 points, down 2.2% week-on-week. The Kowloon property price index was at 154.41 points, down 3.29% week-on-week. The index hit a 28-week low, returning to the level in January this year.

Hong Kong and Kowloon urban property prices fell for 2 weeks, down 2.65% and 3.63% respectively. The New Territories East Property Price Index was at 175.42 points, down 0.99% week-on-week, with the index hitting a 24-week low and returning to the level in February this year. The New Territories West Property Price Index was at 153.29 points, up 0.46% week-on-week, up 2.21% for 2 weeks in a row.

Prospects for this year's property prices, OCBC Bank Hong Kong economist Jiang Jing said yesterday that the bank expects the Federal Reserve will not raise interest rates for the rest of this year, so I believe that the Bank of Hong Kong will not raise interest rates again. As the developers may predict that the interest rate will be or has peaked, so will speed up the pace of the launch. She believes that the upward and downward risks of the Hong Kong property market are similar, and she expects property prices to rise by only 4 per cent for the whole year, which means a drop of about 3 per cent in the second half of the year.

The government has earlier revised its forecast for Hong Kong's economic growth for the whole year to between 4% and 5%, and Jiang said the bank has earlier lowered its forecast for Hong Kong's economic growth this year from 4% to 3.2%, which is lower than the lower limit of the government's estimate. She explained that the downward revision of the forecast is mainly due to high interest rates, the mainland's economic growth slowdown and delay in the introduction of stimulus measures and weakening external demand.

Jiang pointed out that the Hong Kong Dollar Offered Rate (HKDOR) had drawn sharply higher than earlier, mainly due to factors such as demand for Hong Kong Dollar funds such as dividend payouts by listed companies. Looking ahead to September, as there is no large-scale IPO fund-raising activities, it is believed that the chances of Hong Kong dollar rates rising sharply are low, but if the government issues green bonds, if the scale is also large, it may cause Hong Kong dollar rates to rise again.