HONG KONG (Reuters – The decline in private Hong Kong home prices over the past three months was reversed by Friday’s official data. It happened after the financial hub experienced COVID-related troubles and as homebuyers were reassured by new developments.

According to official data, prices in Demographia, which was ranked as the most expensive housing market in the world, rose 0.5% in April compared to March’s revised 0.6%.

Hong Kong’s economy suffered a severe blow earlier in this year when the country imposed some of its most strict social restrictions to combat the COVID virus outbreak. Real estate agents were also forced to reduce their forecasts for 2022 by these measures.

Following months of quiet activity, developers of property rushed to start new sales in April to meet the COVID withdrawal restrictions. Buyers were oversubscribed, which drove up transaction volumes as well as prices.

Some realtors believed that prices had reached their bottom after they fell 3% over the past three months. Others were more cautious.

Spacious, an online property market, predicted that prices would drop by another 5% during the remainder of the year. This was due to a weaker local economy and a worsening outlook for mortgage rates. Also, the adverse effect on individual wealth caused by weaker equity markets.

James Fisher, Spacious’s chief operating officer, said that the market for property would slow down after the initial jump in transactions in April and May. Fisher stated that the initial bounce in transaction volume was stimulated by the release pent-up demand after the lifting of restrictions on the secondary market and the granting of discounts to developers.

Fisher stated that “Developers are continuing to push new supply through discounts, and these headwinds still remain. We think overall market pricing is going to deteriorate further in the coming months.”

His company’s data showed that asking prices on the secondary market were continuing to fall and that overall buyer demand was weak.