Home owners in the world's most expensive and resilient property market will have no respite any time soon, given the unyielding coronavirus pandemic.
Some market observers are expecting private housing prices, which have been sliding since protests hit Hong Kong in the later half of last year, to fall further this year as the pandemic and containment measures weigh heavy on the domestic and global economy.
Mr Christopher Yip of S&P Global Ratings believes the city's residential property prices could fall by 10 per cent to 20 per cent by the year end, from their peak in May last year, while OCBC Wing Hang Bank's Carie Li projects housing prices to drop by up to 15 per cent by the end of this year.
The residential property price index between January and March dropped by 1 per cent quarter on quarter, while rentals fell by 4.1 per cent.
There is, however, a silver lining. "The market is well supported by structural undersupply and low interest rates, which protect it from more severe drops compared to past crises," said Mr Yip.
In a research note on Monday, Citi property analyst Ken Yeung expected home prices to rise between 5 per cent and 10 per cent from this month through the rest of the year.
Land Registry data for April released on Tuesday recorded almost 4,900 property transactions worth HK$38.4 billion (S$7 billion) last month, up 7 per cent from March in both volume and value. The transactions comprised homes, offices and carpark spaces.
The data coincided with an announcement by the Hong Kong government that schools would be reopened in phases from May 27.
Some restrictions on other establishments, such as gyms, cinemas and beauty parlours, have also been lifted as the city's number of new coronavirus infections stabilises. As of yesterday, total confirmed cases stood at 1,044.
Optimism returning was reflected in the pickup seen in the Centa-City Leading Index, which tracks the secondary housing prices, as investment sentiment rallied on the positive news surrounding the global Covid-19 pandemic, said Ms Li.
But she also cautioned that sentiment may soften again, owing to worsening economic fundamentals and corporate earnings, as well as heightened United States-China tensions. "We doubt the sustainability, given the rising unemployment and salary cuts which are expected to dent housing demand," added Ms Li.
Home owners with cash flow problems are adding to the distress in the market. Local media has reported cases of businessmen liquidating their residential properties at deep discounted prices to keep their companies afloat.
