Date
21 January 2017
Property prices are expected to fall amid rising supply and declining demand from mainland investors. Photo: HKEJ
Property prices are expected to fall amid rising supply and declining demand from mainland investors. Photo: HKEJ

UBS sees up to 30% slide in property prices in two years

Hong Kong property prices may slide 25 to 30 percent from current levels by the end of 2017 amid rising home supply, a slowing economy, declining demand from mainland investors, and the long-awaited rate hike cycle in the United States, UBS AG said.

A growing number of mainland investors are shifting their sights to the property market in London, the Hong Kong Economic Journal reported, citing UBS analyst Spencer Leung.

Assets in the city are becoming less attractive to mainland investors as the Hong Kong currency appreciates alongside the US dollar, Leung said.

Property developers have resorted to using their own funds to offer mortgages of up to 80 to 90 percent of the property value in a bid to boost sales and lower inventory.

Meanwhile, UBS warns of a rise in the city’s unemployment rate amid the retail slump. It sees a 7 percent drop in visitor spending and 6 percent decline in the number of tourists who stay overnight.

It said the unemployment rate could rise to 4.5 percent or even to 5.2 percent in the worst case scenario, further depressing the property market.

[Chinese version中文版]

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