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Goldman Sachs forecasts 20 per cent decline in Hong Kong homes prices between 2022 and 2025, as borrowing costs, unemployment rise
- US bank lowers forecast to 5 per cent decline in each year between 2022 and 2025
- Forecast comes as Rating and Valuation Department data shows prices of lived-in homes in February fell the most in more than three years
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The prices of Hong Kong homes are likely to fall by a fifth over a four-year period, as borrowing costs increase and demand slumps because of rising unemployment, Goldman Sachs said.
Goldman lowered its forecast from flat prices this year, followed by 5 per cent declines in 2023 and 2024 and a return to flat again in 2025, with a 5 per cent decline in each year between 2022 and 2025.
“This cumulative 20 per cent price fall from year end 2021 levels would be enough to compensate for the 230 to 240 basis points higher borrowing costs, as it restores affordability along with an expected pickup in household income of 10 to 15 per cent by then,” the bank said in a report published on Monday.
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The American investment bank’s forecast came as Rating and Valuation Department data revealed on Tuesday that the prices of lived-in homes had in February fallen the most in more than three years.
Hong Kong’s economy most likely contracted in the first quarter of this year, Financial Secretary Paul Chan Mo-po said, as the jobless rate for the three-month period ending in February rose to 4.5 per cent, the highest level in nearly five months. The retail and catering industries were hit particularly hard by the city’s strictest social distancing curbs since the pandemic began two years ago.
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