Prices rose 0.1% from a month ago in January, government data showed, compared with December’s revised 2.3% decline.
Thomas Lam, executive director of Knight Frank, said while the data showed prices stabilising, a sustained recovery was unlikely.
“Now the market is relatively stable, I forecast the index will rise another 0.5% in February,” he said. “I expect the property will continue to correct this year.”
Knight Frank maintains its full year forecast for a 10% decline this year with vulnerability seen in the so-called “nano flat” sector.
Over the past 10 years, ultra low interest rates, limited housing supply and large capital flows from mainland Chinese buyers helped push housing prices up more than 200%. That bubble was burst in the middle of last year and prices have since come off 9%.
A continued correction could lead to more cases of negative equity on residential mortgage loans, which resurfaced for the first time in two years in the last quarter of 2018.
Affordability is still an issue. A flat of 60 square metres on Hong Kong Island cost an average of $1.74mn in January, according to official data.
On Wednesday, Hong Kong Financial Secretary Paul Chan said in the budget for the upcoming fiscal year that estimated public housing production for the next five years is 100,400 units, while private sector will complete 18,800 units annually, up 20% from the past 5 years.
He added that the government has no intention to withdraw any demand-side management measures at this stage, which includes extra stamp duty, as home prices are still above people’s affordability levels.
Leading developer Sun Hung Kai Properties said an easing of trade tensions between Beijing and Washington and banks’ favourable mortgage plans would support Hong Kong’s housing market.