Home prices in Hong Kong are expected to correct by 10 to 20 percent due to less demand from mainland Chinese buyers, tight property restrictions and higher interest rates, noted Frederic Neumann, Co-head of Asian Economics at HSBC.
“I think the [cooling] measures that we've seen imposed certainly put a dampener on the market. But if you look ahead there are also other headwinds coming in, a China slowdown is certainly going to weigh on property prices.”
“And we have higher US dollar interest rates [which] directly feed into Hong Kong as well,” he added.
Neumann expects housing prices to decline should transaction volumes continue its downward trend. Data from Hong Kong's Land Registry showed that residential transactions fell 49 percent in May to 4,276 units from 8,349 during the same period last year.
“Usually prices follow transactions, so if transactions remained as depressed as they have been, a 10 to 20 percent correction in some segments of the market cannot be ruled out, especially in the top end of the market,” he noted, adding that the decline could take place in the next one to two years.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, wrote this story. To contact him about this or other stories email firstname.lastname@example.org