HONG KONG Hong Kong private home prices dropped 1.7% in September to the lowest since April 2017, official data showed on Friday, as rising interest rates and a bleak economic outlook weighed on homebuyer sentiment.

The September drop in home prices in the financial hub, one of the most expensive markets in the world, followed a revised 1.8% fall in August, according to data.

Five monthly falls in a row have erased gains made this year, and realtors expect prices will fall up to 5% for the full year.

Hong Kong's leader, John Lee, announced on Wednesday in an annual policy address that stamp duty would be halved to 7.5% from 15% for second home buyers and non-citizen buyers with immediate effect, to help revive a sector that is a pillar of the city's economy.

Martin Wong, head of Greater China research and consultancy at Knight Frank, said it would take time for the lower stamp duty to have an impact on purchasing power.

"With the market lacking other positive news, home prices will still face large pressure in the rest of this year," Wong said.

Other new adjustments to help the property market included allowing some home owners to sell their properties after two years without incurring hefty duties.

Some analysts, however, said the measures were only a band-aid solution that would be unlikely to reverse the downward trend in prices.

Wong said property developers had been cutting prices aggressively in order to clear inventory.

(Reporting by Clare Jim; Editing by Robert Birsel)