Hong Kong's private home prices experienced a sharper decline in July, marking the third consecutive month of decreases.

The fall was predominantly due to potential buyers hesitating on the sidelines, awaiting clearer indications of future interest rate cuts. 

According to official data released on Wednesday, home prices in one of the world's most expensive property markets fell by 1.9% in July compared to the month before. This followed a revised 1.0% decline in June.

The initial boost in demand seen after the lifting of all property purchase restrictions in February has since faded. By May, the market had lost momentum, as much of the pent-up demand from homebuyers had been satisfied.

In response, property developers began offering new flats at significant discounts to stimulate sales.

Overall, home prices have plummeted by 25.4% since their peak in 2021, reaching levels not seen since September 2016, Reuters news agency reports.

The decline has been exacerbated by rising mortgage rates, a talent outflow, and a generally bleak market outlook. 

Real estate agents predict that prices will continue to fall until local banks begin to lower interest rates, which is anticipated to occur later this year or early next year.

Furthermore, Hong Kong's monetary policy is closely aligned with that of the US Federal Reserve due to the city's currency peg to the US Dollar. However, local banks retain the autonomy to set their own interest rates based on their funding costs.