Hong Kong home prices hit record, outlook cloudy pending rate rise
As home prices surge to fresh records despite cooling measures, opinion divided over 2015 outlook, though more supply seen keeping rents down
Hong Kong home prices surged to a record high this year, ignoring the government's introduction of tough measures designed to cool the red-hot property market, as the rally extended for a fifth straight year.
But there are a wide range of views about the likelihood of it lasting much longer, with interest rates likely to rise amid fierce market competition.
While some market watchers predict prices will fall by up to 10 per cent next year, others say they will level off or even rise by 10 per cent.
"The property bubble was already building up in Hong Kong, otherwise the government wouldn't have needed to roll out a slew of cooling measures to cap price growth [in November 2012]," said Eddie Hui Chi-man, a real estate professor at Polytechnic University.
He said that as interest rates headed for an upward trend, home prices in Hong Kong could drop by 3 to 5 per cent next year.
Alfred Lau, a property analyst at Bocom International, has downgraded the residential market outlook for the first time in three years, mainly due to the recent price overshoot and weaker rental outlook.