MONG KOK: Hong Kong’s home prices dropped to the lowest in almost seven years as high interest rates continue to weigh on buyers’ appetite, driving them to rent instead.

Residential prices fell 2% in November from a month earlier, a seventh straight decline, according to government data. The price index is now at its lowest since early 2017. In contrast, rents in the city rose for a 10th month to the highest in four years.

Expensive borrowing costs are discouraging homebuyers, prompting them to ride out the tightening cycle by renting apartments. The rental market is also getting a boost from the government’s push to lure foreign professionals to the city.

Home prices may rise about 5% next year if interest rates fall and the government removes even more property cooling measures, Sammy Po, chief executive officer of the home division at Midland Realty, said in a statement Wednesday. Rents may increase 10% in 2024, he added.

From individual homeowners to listed developers, sellers in the city are struggling to find buyers. Property firms are resorting to offering discounts at their new projects to speed up sales.

Builders’ share prices have underperformed the Hong Kong’s benchmark index this year. Sun Hung Kai Properties Ltd is down by more than 20% since the start of the year while New World Development Co has tumbled 46%.