Date
19 November 2017
Interest-rate changes and increased land supply will exert downward pressure on Hong Kong home prices this year, analysts say. Photo: HKEJ
Interest-rate changes and increased land supply will exert downward pressure on Hong Kong home prices this year, analysts say. Photo: HKEJ

HK homes prices seen falling up to 10% this year in real terms

Hong Kong’s property market will face some headwinds in 2015 due to expected interest-rate adjustments by the United States and increased land supply, according to analysts.

Real prices of new home units, after deducting discounts and subsidies provided by property developers, may drop 5 to 10 percent this year, the Hong Kong Economic Journal cited Eva Lee, head of China and Hong Kong property research at UBS AG, as saying.

The fall will come after a 3 to 4 percent decline in prices in real terms last year, Lee said, adding that her projection has factored in slower economic growth rate of about 2.5 percent and a 3.3-percent unemployment rate.

UBS expects the Fed funds rate to rise by 50-100 basis points in total this year, which could prompt Hong Kong banks to raise their interest rates by quarter-percentage point.

The overall home sales volume in the city may increase mildly — by about 5 percent — while fresh supply is seen totaling 19,000 units.

Separately, Fitch Ratings said that it expects Hong Kong home prices to stay flat or edge up 5 percent at the most. While developers are confronted with rising construction costs and mounting competition, demand will hold up, it said.

DBS Vickers analyst Yau Cheuk-man, on the other hand, anticipates a 5-percent decline in property prices this year. The luxury segment is expected to take a further hit.

Translation by Vey Wong [Chinese version中文版]

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