Hong Kong July foreclosures surged the most in more than five years, as higher rates pinched homeowners’ ability to pay mortgages, according to Centaline Property Agency Co.

The number of homes taken over by creditors in Hong Kong last month increased by 45 units to 246 from June, based on units commissioned by Centaline.

It’s the latest headwind facing a property market long known for being the most unaffordable in the world. Billionaire Li Ka-shing’s CK Asset Holdings Ltd. recently started selling apartments at the lowest price in seven years, while HSBC Holdings Plc’s prime rate is at its highest level since 2008.

A tiny flat in Sai Ying Pun was auctioned off at about 50% below the purchase price, estimated to be the largest discount among studio flats in Hong Kong, according to Centaline.

The total number of foreclosed homes in supply could surpass the 316 units recorded in 2008 if property prices fall by another 10%, said Louis Chan, a manager from Centaline.