This June 3, 2021 file photo shows an aerial view of Choi Hung public housing estate and other residential buildings with the Lion Rock peak in the background, in Hong Kong. (JOYCE ZHOU / REUTERS)

HONG KONG – Hong Kong private home prices dropped 3.3 percent in November to the lowest since August 2017, official data showed on Wednesday, as its housing market – one of the most unaffordable in the world – is set to post the first annual drop since 2008.

Prices in the Asian financial hub were weighed down by a weak economic outlook and rising mortgage costs, following a serious COVID outbreak at the beginning of the year.

November's fall in home prices came after a revised 2.7 percent drop in October. Home prices in Hong Kong have fallen 13.8 percent in the first 110 months of the year.

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Transaction volume for the year is expected to fall to a decade low but it could have a small bounce next year after authorities lift travelling restrictions with the Chinese mainland, property agents said.

Home prices in Hong Kong have fallen 13.8 percent in the first 110 months of the year

For 2023, real estate consultancy Cushman & Wakefield expects home prices to be 0-5 percent lower than this year, with prices stabilizing in the second half after an expected peak of interest rates.

Another consultancy, JLL, expects prices to fall another 10 percent next year for the mass market. It said a high level of inventory for developers due to a surge in unsold units this year would drive developers to offer discounts.

The selling prices of some recently launched projects were 7 percent to 13 percent lower than the average price of the secondary market in the same area, JLL added.

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Last week, major developer CK Asset Holdings, owned by the city's richest man Li Ka-shing, won a residential land plot in the downtown Kai Tak area for a price much lower than market expectations. Surveyors said the floor price represented an eight-year low in the area.