The Rating and Valuation Department (RVD) announced yesterday that the latest Private Domestic Property Price Index (PDPI) for August was 339.2 points, a month-on-month drop of 1.4 per cent, down for four consecutive months, hitting a seven-month low, narrowing the rate of price increase to 1.3 per cent this year, and a cumulative drop of 14.8 per cent from the record high of 398.1 points in September 2021, while rents have rebounded.

Property prices have not stopped falling but rents have risen continuously, the rental index in August at 185.4 points, a month-on-month increase of 1.4%, a 43-month high since February 2020, a cumulative increase of 6.6% for seven consecutive months. The industry pointed out that, if no good news is introduced, it is expected that property prices may expand the rate of decline to 1.5% in a single month, with a cumulative decline of 5% for the whole year.

By household type, all sectors recorded another month-on-month decline.

Class E (1,722 sq ft or above) recorded the biggest drop, with fewer than 20 transactions at 290.2 points, down 2.12% month-on-month; Class C (753 to 1,076 sq ft) at 311.2 points, down 1.36%; and Class D (753 to 1,076 sq ft) at 296.7 points, down 1.36%.

For small and medium-sized units, Class B units (431 to 752 sq ft) were at 329.8 points, down 1.46 per cent, while Class A units (431 sq ft or less) were at 368.7 points, down 1.29 per cent.

Knight Frank director and head of research and consultancy for Greater China S K Wong said the official property price index, which reflects predominantly second-hand property prices, fell by a further 1.4 per cent month-on-month in August, and by a total of 4.2 per cent between May and August.

Factors such as rising interest rates, lack of purchasing power and the build-up of new flats continue to push property prices downwards. In the absence of any good news in the market, residential property prices will face strong resistance for the rest of the year, and are expected to fall by 5 per cent in the second half of the year.

Colliers Hong Kong, head of research, said Lee Yuen-yin, private residential prices from May to end the first four months of the formation of the upward trend, and the rate of decline in August to expand, resulting in the first eight months of the cumulative rate of increase narrowed to 1.3 per cent.

Looking at the private residential market in August and September, developers continued to reduce prices for promotional purposes, indicating that there is still a chance for downward price adjustments, coupled with the announcement by the Federal Reserve Board that it may raise interest rates again in November, which has affected buyers' confidence in entering the market.

Whether property prices will fall further, Lee Yuen-yan expects that, depending on whether the next policy address has introduced policies and measures favourable to the property market, it is estimated that the remaining four months of downward adjustment in property prices may lead to flat or negative growth in property prices for the whole year.

As a result, the bank adjusted its forecast for small and medium-sized private residential property prices for the year to 0 to minus 3 per cent.

In addition, Ricacorp real estate research department director Chan Hoi Chiu said, August property prices fell wider, mainly reflecting the Hong Kong and the United States continued to raise interest rates in late July, the desire to enter the market is slow, when the first and second-hand sales were slow, developers were then in early August to "shock price" to launch, so that the second-hand market is more unable to resist, the second-hand owners to sell their goods only to further price cuts, to the index fell wider.

As for the market situation in September, developers continued to launch new first-hand flats at low prices, while the second-hand market continued to suffer, coupled with the market's concern that interest rates have not yet peaked, and the spate of low land sales, reflecting the overall market situation is extremely cautious and bearish, and it is expected that the index will extend its decline to 1.5% in September.

If the authorities have concrete measures to stimulate the property market, the property market is expected to stabilise in the fourth quarter, and property prices are expected to remain flat for the whole year; if the Policy Address lacks surprises, property prices are expected to fall by 3% to 5% for the whole year in the worse case scenario.

As for the rental index, Chan Hoi-chiu pointed out that the cumulative increase of 5.64% in the first eight months of this year is expected to rise by another 1.5% in September, which will lead to a 4% increase in the third quarter, and driven by the demand for housing from more buy-to-let tenants and professionals coming to Hong Kong, rents in the fourth quarter are expected to rise by another 3%, and rents for the whole year are expected to rise by 10%.