(Bloomberg) -- The number of people in Hong Kong whose homes are worth less than their mortgages surged to an 18-year high as the financial hub struggles with the worst housing slump in more than a decade.

There were 12,164 cases of so-called negative equity in the fourth quarter, according to data released by the Hong Kong Monetary Authority. That’s 22 times higher than the previous quarter, according to mReferral Mortgage Brokerage Services. The combined value of these underwater mortgages was HK$66.3 billion ($8.5 billion).

A decline in prices combined with soaring interest rates are squeezing homeowners in what’s traditionally been one of the world’s most expensive housing markets. Prices declined about 16% last year, according to Centaline Property Agency. The city’s one-month borrowing cost, which sets most mortgage rates, climbed to a four-year high in December.

Still, the recent border reopening with mainland China and the removal of most Covid-related restrictions in Hong Kong have boosted optimism in the market. The number of negative equity homes may drop in the second quarter given the potential rise in home values, said Eric Tso, chief vice president at mReferral in a emailed statement.

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