HONG KONG, July 29 (Reuters) - The number of cases in Hong Kong where a home is worth less than the amount paid for it eased slightly in the latest quarter, the Hong Kong Monetary Authority (HKMA) said on Friday.
Negative home equity totalled HK$4.45 billion ($573.74 million) at the end of June, a drop of 9.5 percent from the end of March. The amount that was unsecured was HK$157 million, which was also less than in March.
These figures are still significantly higher than at the start of 2016.
Data from the de facto central bank showed the number of homes in negative equity was 1,307 at the end of June, compared with 1,432 at March 31. There were only 95 such homes at the end of December.
The economic slowdown in China has put pressure on Hong Kong, one of the world’s priciest property markets, making some fear a dramatic decline in the sector accounting for almost one-fifth of the city’s economy.
Some Mainland Chinese who were big purchasers of luxury flats have less money and Hong Kong businesspeople - many of whom built their businesses in the mainland - are also being squeezed.
Rating agencies and others say the HKMA data might not give the full picture. Its negative home equity data only includes mortgages from authorized institutions to first-time home buyers in situations where the lender is aware that the loan is underwater. Some buyers also take high-interest loans from unregulated finance companies.
In the first quarter of this year, Hong Kong’s economy contracted 0.4 percent from a year earlier. Second-quarter growth data for the Asian financial hub is due on Aug. 12.
In a separate statement on Friday, the HKMA said home mortgage loan approvals dropped 3.2 percent in June compared with May, to HK$22.3 billion. The number of mortgage applications also dropped.
Data from the city’s Rating and Valuation Department showed home prices were flat in June while rents increased 0.5 percent from May.
$1 = 7.7561 Hong Kong dollars Editing by Richard Borsuk