Hongkongers continued to snub new home sales on Sunday as sentiment in the property market remained weak and potential buyers stuck with a wait-and-see attitude brought on by rising interest rates and a sluggish economy.

As of 7pm, only two out of 139 units on offer at Miami Quay, a new development at the site of Hong Kong’s former airport, had been sold, according to Sammy Po, CEO of Midland Realty’s residential division for Hong Kong and Macau.

The project at Kai Tak was jointly developed by Wheelock Properties, Henderson Land Development, New World Development and Empire Group.

Sunday’s sales were even worse than last Monday when less than a third of 137 flats that went on sale in the first batch found buyers.

“Last time they sold about 40 flats. Buyers interested in this project made their purchases then,” Po said. “The developers decided to launch another round of sales with the hope of attracting more buyers, but market sentiment is slow and the wait-and-see attitude prevails. There were not many new buyers for the extra launch so the sales were lacklustre.”

Among the 139 units on offer on Sunday, 65 were new, while the rest was left unsold last week.

Analysts cited the rising costs of home loans as a major factor for the current slump in appetite for residential property.

The Hong Kong Monetary Authority, effectively the city’s central bank, has raised its base rate in lockstep with the Federal Reserve under its linked exchange rate system with the US dollar.

After increasing its benchmark rate for two consecutive months in June and July, another round of increases is likely this month, with analysts estimating as much as a 75-basis points hike.

“Higher interest rates are weighing on sentiment. Rates have already nearly doubled to 3 per cent and will continue to increase,” said Victoria Allan, founder and managing director of Habitat Property, an agency. “While this is still very low compared to many other countries, it’s a big increase for the local market and is dampening sentiment.”

With US inflation still likely to surge, rate rises are forecast to continue until next year when consumer prices could be brought under control, Allan said.

Hong Kong’s economic slump is further dampening demand. In August, the government further cut its forecast for the city’s economy to between 0.5 per cent growth and 0.5 per cent contraction. It previously estimated that the economy was likely to see a 1 to 2 per cent growth.

The recent wave of emigration is not helping, as more people leaving the city could only mean less demand for homes.

More than 113,000 residents left the city in the 12 months to June, with the population shrinking by 1.6 per cent, the latest figures from the Census and Statistics Department showed. In the same period of the previous year, the population decline was 1.2 per cent.

The local property market is also influenced by the performance of the Hong Kong stock exchange, and with the bellwether Hang Seng Index losing nearly a fifth of its value so far this year, buyers’ sentiment is downbeat, Allan said.

“The Hong Kong property market is very correlated to the equities market. Its poor performance in the last few months has dampened sentiment,” she said.

“This combined with other macro factors such as rampant inflation, the war in Ukraine and Hong Kong not opening up [its borders in the wake of the pandemic] is impacting the market and damaging many businesses. These factors will continue to impact sentiment well into 2023.”

The units on offer on Sunday had sizes between 250 and 716 square feet and were priced between HK$5.24 million (US$668,000) and HK$18.73 million, after discounts of as much as 12 per cent.