Home prices in the financial city have been fluctuating so far this year, posting declines in February and April, and gains in rest of the months. For the first half, prices accumulatively gained 1.8%.
"The current property market is very 'deformed'; home prices still remain high, but rents have already been falling due to a weak economy," said Thomas Lam, executive director of property consultancy Knight Frank.
In June, the market recovery was capped by Beijing's plan to impose national security law in the city, sparking a fresh round of escape plans among residents.
Property agents said the fresh wave of COVID-19 outbreak in early July further dampened market sentiment, and the government's social distancing measures hindered flat-visiting activities.
With the economy in recession, Lam expected the impact on home purchasing power would surface in the fourth quarter, pressuring prices.
The economy contracted 9.0% in April-June from a year earlier, shrinking for the fourth quarter in a row and the second-biggest drop on record, government advance estimates showed earlier this week.
Realtors added, however, with the strong pent-up demand and low interest rate environment, they did not expect to see a big correction in prices.
Developer Hang Lung Properties said on Thursday home transaction volume dropped in the first half because of the pandemic, and there could be some more correction going forward.
(Reporting by Clare Jim; Editing by Simon Cameron-Moore and Subhranshu Sahu)