New | Hong Kong home prices face a reverse trend after a 12-year upcycle
But analysts can’t agree on how bad the downside is going to be
A reverse trend is coming for Hong Kong home prices after a nearly 12-year upcycle, according to consensus opinion among property experts, although the magnitude and pace of the expected price correction remains a source of contention.
Last week’s quarter-point rise in interest rates by the US Federal Reserve has helped to dampen interest among buyers, even as local banks have yet to factor the tightening into their mortgage rates. Expectations of additional interest rate rises next year, coupled with concerns over China’s slowing economy are expected to take a further toll on confidence, pushing the housing market into a deeper downtrend.
Some experts forecast home prices to fall up to 30 per cent next year, while others believe only a 5 per cent dip is likely in 2016.
It is hard to come up with a prediction more forward than three months
“It will be less painful if prices corrected 30 per cent in a single year,” said Alfred Lau, a property analyst at Bocom International.
Prices for some new project launches have fallen 20 per cent, he said.
Owners are expected to offer steeper discounts in the first and second quarter next year, he said, adding that the market believes the US Fed will tighten interest rates twice more in 2016.
“Individual owners are still reluctant to sell right now, but they will become more realistic once they see rents decline at a faster pace early next year,” said Lau, who is bearish on the market outlook for 2016.