Analysts expect steep fall in Hong Kong flat prices
Higher mortgage rates and cost curbs 'may take a quarter off values' in the housing market
Hong Kong home prices will fall by as much as a quarter as a result of the government's stepped-up measures to cool the housing market and rises in bank mortgage rates, equity research firm Sanford C. Bernstein Hong Kong forecast.
But other institutions are less pessimistic and expect prices to drop 20 per cent at most in the coming two years or stay flat this year.
Holding the most bearish view so far, Bernstein analysts, led by Kenneth Tsang, wrote in a report yesterday that the number of new flat sales would "remain largely subdued", with developers shifting their focus to cheaper and smaller units to boost sales.
Cheung Kong, which last month lowered prices by almost 10 per cent at its One West Kowloon project in Lai Chi Kok in response to the government curbs, could introduce more price cuts to boost sales, the analysts said.
However, UBS Investment Research forecast that overall home prices might drop by only 5 to 10 per cent from now until the end of this year even with the official measures driving away investors and overseas buyers.
The bank said that because prices increased about 5 per cent in the first quarter, home prices this year would remain flat or decline 5 per cent or less year on year.
We don't think home prices will drop as much as others have predicted because the supply problem is not yet solved