HK's Peak residential prices fall to decade low

Property prices on The Peak, most expensive residential area on the Hong Kong Island, experienced the biggest drop since the Asian financial crisis ten years ago, according to local media on Wednesday.

The prices slumped 41.4 percent in the final three months of last year compared with the previous quarter. The fall was the biggest on record in Hong Kong's luxury real estate market underscoring the seriousness of the global economic slump, the South China Morning Post Wednesday reported.

In the final three months of 1997, prices on The Peak fell only 16 percent, property consultant CB Richard Ellis said, though it cautioned that a slump in sales meant one big transaction could skew its figures.

Prices on The Peak have increased most rapidly over the past few years and that's why they dropped the most once the market entered a down cycle, said Margaret Ng, a senior director at the firm.

Ng said prices on The Peak rose 27 percent between the last quarter of 2007 and the second quarter of last year, to an average of about 327,373 HK dollars (about 41,970 U.S. dollars) per square meter.

The economic outlook is still uncertain. The effect of the economic rescue packages may be seen in the second half of this year. We have to wait and see, she said.

Simon Lo Wing-fai, a director at property consultant Colliers International, said fewer than 10 homes priced at 15 million HK dollars or more had been sold citywide each week since the onset of the global financial crisis.

He said that 30 to 40 luxury homes were being sold every week before the start of the crisis.

Average luxury residential prices fell to about 118,611 HK dollars (about 15,206 U.S. dollars) per square meter in December, returning to September, 2007 levels, he said, expecting that prices will drop 15 to 20 percent this year.

Adrian Ngan Wai-hung, an executive director of research at CCB International Securities, believes property prices will drop a further 5 to 10 percent in the short term but that they will stabilize in the second and third quarters of the year.

Source: Xinhua