The steepest decline since the Asian financial crisis a decade ago to ome prices on the Peak, Hong Kong’s most-expensive residential area, has been reorted byreal estate agency CB Richard Ellis Group.
Prices slumped 30.5% in the fourth quarter of 2008 from a year earlier as the recession damaged demand. Margaret Ng, senior director of Greater China at CB Richard Ellis said this is the biggest drop since the third quarter of 1998 when it dropped 45%.
Hong Kong’s Hang Seng Index and China’s stock market have both dropped almost 60% since their October 2007 peaks, cutting into home buyers’ wealth.
“In early 2008, prices went really crazy because of stock market gains,’ Ng said in a phone interview yesterday. ‘Many Chinese also had money from IPOs in Hong Kong, and when they get rich, the first place they look to buy is the Peak.’
According to Bloomberg Hong Kong’s jobless rate rose to 4.1% in the fourth quarter, the highest level in 15 months. The number of luxury homes, defined as those worth at least $1.3 million, changing hands, fell 65% to 258 in January from 734 a year earlier, Land Registry figures show.
Even with the recent decline, luxury prices are unlikely to fall to lows posted during Hong Kong’s severe acute respiratory syndrome epidemic in 2003, because buyers are richer and managing risks better.
Fourth-quarter prices were also 63.4% higher than the average fetched at the Peak in the third quarter of 1998.