HSBC economist says home prices could rise 15pc next year
HSBC predicts Hong Kong property prices will rise 10 to 15 per cent next year, driven by low interest rates and the spillover effect from excess liquidity on the mainland.
The bank believes the Hong Kong government's measures announced in the policy address this month to cool prices are only short-term remedies and will not have any effect on prices next year.
Interest rates are expected to remain at record lows until the second half of 2012, which will result in more mainland capital flowing into Hong Kong's property market, HSBC economist Donna Kwok said yesterday.
Interest rates have been at record lows in Hong Kong and the United States since 2008 amid the loose fiscal policy adopted by the US to shore up the economy.
Housing prices in the city have risen 15 per cent this year and are up nearly 50 per cent over the past 20 months, increasing pressure on the government to rein in prices. However, the recent cooling measures fell short of public expectations.
'A wild card to watch is a proposed revitalisation of the government's Home Ownership Scheme,' a HSBC report dated September 16 said. Government-built residential housing offered at a discount, suspended since 2003, is the best solution to address the fundamental demand and supply problem of the current property market, the bank said.
The influx of capital from the mainland and overseas, runaway property prices and a rising stock market would boost consumer confidence, Kwok said.
However she warned inflation could accelerate. The inflation rate in Hong Kong will reach 2.9 per cent next year before rising to 3.3 per cent in 2012, compared with the projected inflation rate of 2.4 per cent for this year, she said.
'Inflation would be one of the major policy concerns for the government as it lacks a monetary tool [to check inflation],' Kwok said.
Up, up, up ...
Hong Kong home prices over the past 20 months have risen: 50%
