Date
26 May 2017
Residential prices have slumped 9.5 percent since September last year. S&P is warning that property developers will see their credit rating slashed if home prices continue to fall. Photo: HKEJ
Residential prices have slumped 9.5 percent since September last year. S&P is warning that property developers will see their credit rating slashed if home prices continue to fall. Photo: HKEJ

S&P sees Hong Kong home prices falling 15%

Hong Kong property prices might fall another 10-15 percent this year but transaction volumes could grow 5 percent or stay flat.

Also, China’s slowing economy will pile pressure on property developers, the Hong Kong Economic Journal reports, citing Standard & Poor’s Financial Services LLC (S&P).

Residential prices in Hong Kong have slumped 9.5 percent since September last year.

The credit rating of property developers will suffer if property prices fall more than 50 percent, wiping 25-30 percent off their EBITDA (earnings before interest, tax, depreciation and amortization), S&P said.

It expects property prices to fall in the next three years amid a slowing economy and rising interest rates.

Meanwhile, the average household’s mortgage affordability will fall 30 percent if interest rates rise at least 300 basis points, S&P said.

[Chinese version中文版]

– Contact us at [email protected]

VW/JP/RA

Hong Kong Economic Journal

EJI Weekly Newsletter

Please click here to unsubscribe