HONG KONG'S faltering property market may face another obstacle if US interest rates rise again. David Faulkner, a partner at property company Brooke Hillier Parker, said market watchers believed another rise in US interest rates was imminent. 'If Hong Kong responds with a local interest rate increase, the effect on the market will hinge on the size of the rise,' he said. 'Mortgage rates are already close to 10 per cent and if there is a local interest rate rise of one per cent, it will definitely be felt by intending buyers.' Mr Faulkner said a rise to 11 or 12 per cent would add to the cash shortage already being felt by first-time buyers, killing off any prospects for a recovery in the market. But he said a rise of two or three per cent would be needed before there was a more widespread belief that the market was too expensive. The largest barrier stopping first-time buyers from entering the market is still the bank ruling that they pay a 30 per cent deposit. 'It will be some time now before new buyers can get in the market without public assistance of some kind,' Mr Faulkner said. 'If you have a flat and you want to upgrade, you are going to be all right. But if you're starting out at the bottom of the chain you have to come up with your own cash.' Mr Faulkner said there was no sign that the banks were reassessing their lending terms. The market slowdown is expected to continue until the Lunar New Year. Even so, the fall in sales has not stopped some estates in North Point and Chai Wan from recording price rises of about four per cent, to $6,844 per square foot and $6,358 per sq ft respectively. But flats surveyed in Quarry Bay have dropped 1.5 per cent to $6,320 per sq ft since last month.
