Luxury property values in Hong Kong will continue its decline for the rest of the year, but it won’t be a precipitous drop, property consultants maintain.

In a new report, Knight Frank predicts home prices in Hong Kong to decline by 5 to 10% for the rest of the 2016.

However, the decline will transpire on a “gradual downward slope,” according to David Ji, Knight Frank’s director and head of research and consultancy for Greater China.

“If you look at the similar price trends in the mass market, which goes up and down, a sector impacted by various financial crises, policies and so forth, [in comparison]the prices in the luxury sector has been stable,” Ji told Forbes.

Of the five wealthy neighbourhoods tracked by the Knight Frank report, Pokfulam showed the steepest fall, with values decreasing 13.9% year-on-year to HKD21,728 (USD2,802) per square foot.

Island South also registered an 8.7% fall over the past year, followed by Mid-Levels at 8% and The Peak at 5.7%.

Luxury home values in Jardine’s Lookout and Happy Valley saw the only month-on-month decline (-0.7 percent) among the five areas surveyed. Year-on-year, the area saw tumbles by as much as 5.3%.

Rental values remained stable in the Peak and Mid-Levels in July, the report also showed.

In anticipation of a hike in Federal Reserve rates by the end of the year, developers are expected to continue offering aggressive mortgage schemes and deep bargains to unload inventory, Knight Frank predicted.

By Al Gerard de la Cruz @ property-report.com