Private house prices in Hong Kong fell in May after a brief upswing. This is due to homebuyers, who tend to buy houses, shying away from higher borrowing costs.
Home prices fell 0.3% last month from the previous month, while they had risen 1% in April.
Hong Kong’s economy is weak this year. This is due to strict restrictions to combat the COVID-19 virus outbreak. But confidence has improved after the city started to relax most of the measures.
The number of home transaction deals in May rose 59% from April to a 10-month high.
Some homebuyers have become more cautious before interest rates are raised in the second half of the year. Interest rates linked to mortgage rates in the city’s interbank market are already on the rise.
This month, the Bank of Hong Kong raised its key interest rate, which is levied through the overnight lending window, by 75 basis points to 2%.
The head of the central bank has urged the public to “carefully evaluate and manage the appropriate risks” when making real estate purchases and mortgage decisions.
Hong Kong’s interbank rate, used as a benchmark for mortgage pricing, rose to a two-year high this month.