The drop in July compares to a revised no change in June. Supported by strong demand and low interest rates, prices have still gained 1.5% so far this year.
The financial centre was hit by a new wave of coronavirus infections in July, pushing housing transaction volumes to a four-month low in August. The real impact on property prices will be reflected in August and September due to a lag effect, agents said.
The market’s recovery was also capped by Beijing’s imposition of a national security law in the Chinese-ruled city on June 30, sparking a fresh exodus among residents.
“The drop is smaller than expected, it’s mainly because large-sized properties have out-performed,” said Thomas Lam, executive director of Knight Frank.
He expected the market correction will continue, citing weak purchasing power in an economic recession.
Realtor Centaline noted the secondary housing market became active again in late August as the pandemic eased in the city.
“Government easing (of) social-distancing measures also provide a positive signal,” it said.