NewNew World Development posts 4 per cent rise in underlying profit as net earnings jump 96.5 per cent
Net profit up to HK$19b as head of property firm sees room for home prices to fall on a change in US rates and increased home supply
A looming interest rate increase and an anticipated rise in home supply could see Hong Kong home prices fall, New World Development chairman Henry Cheng Kar-shun said after his company posted a 4 per cent rise in underlying profit to HK$6.77 billion for the year to the end of June.
Net profit jumped 96.52 per cent to HK$19.11 billion, partly helped by a stronger contribution from property sales and a 122 per cent year-on-year increase in revaluation gains on property investments.
"If the US (Federal Reserve) does not raise interest rates this year, it will happen next year," Cheng said yesterday at the results announcement.
He said another factor that would stop home prices from rising further was an increase in home completions as a result of the government's determination to increase land supply for flat building.
The Hong Kong housing market's up-cycle is now into its 12th year, with home prices up 10.09 per cent so far this year.
"I am not saying home prices must go down," Cheng said. "But there is room to see home prices fall, and the chance to see a further price rise is small."
However, he said even if home prices fell, the drop would not be more than 10 per cent, "because there is a strong home demand".