Hong Kong home prices to erode another 10% in 2024 as impact of expected interest-rate cuts will take time: Citigroup
- ‘It will take time for interest-rate cuts to impact the Hong Kong economy,’ analyst says
- The bank expects the Fed to start cutting interest rates in July and reduce them by 1 per cent this year
Hong Kong’s home prices will drop another 10 per cent in 2024 as a looming supply glut and high interest rates continue to suppress investment sentiment even though the local stock market may rebound by midyear, according to Citigroup.
The US Federal Reserve will start cutting interest rates in July and reduce them by 0.25 per cent at each subsequent meeting, for a total cut of 1 per cent this year, the investment bank forecast on Tuesday.
“It will take time for interest-rate cuts to impact the Hong Kong economy,” said Ka Liu, head of investment strategy and portfolio advisory at Citibank Hong Kong. “We remain conservative on the residential market outlook, as mortgage rates will stand high, exerting repayment burden on potential buyers.”
Meanwhile, the supply of new flats will be high, with Citigroup expecting an average of 20,000 units to be completed in the coming two years, compared with sales of 10,000 units in 2022 and 9,000 units in the first nine months of 2023, Liu said.
Home prices may bottom out in 2025, depending on interest-rate trends and China’s macro environment, he said.