Hong Kong home prices could nosedive 30 per cent through 2023 as interest rates repel buyers, Goldman Sachs forecasts
- The American investment bank issues a pessimistic revision of an earlier forecast that predicted a 20 per cent decline
- High mortgage rates will continue to reduce affordability and keep investors away without better economic conditions or more policy support, the bank says
Hong Kong home prices are set to plummet by as much as 30 per cent by the end of 2023, as sharply increasing interest rates continue to make homes less affordable and repel investors from the market, according to Goldman Sachs.
The American investment bank, after revising its forecast downwards on Tuesday, now expects prices to fall by 15 per cent in both 2022 and 2023, compared with year-end 2021 levels, followed by no change in 2024. It had earlier predicted that prices would fall by a total of 20 per cent through 2024.
“This view change is due to a faster-than-expected rise in and higher medium-term level of Hibor, and hence mortgage rates,” the bank said in a report, referring to the Hong Kong interbank offered rate. “This would continue to pressure affordability, [and] keep investors away from the market unless macro or policy becomes more supportive.”
Hibor is the interest rate banks charge each other for borrowing money. The one-month Hibor has soared to over 2.5 per cent – the highest level in more than 2.5 years.
