Hong Kong home prices are still going through an adjustment period, despite the improved buying sentiment in recent months, according to property analysts. The fundamentals – slowing local economy, potential interest rate hike and increased new supply – are the bearish factors clouding the sector, medium term. Janet Yellen, the Federal Reserve chairwoman, said on Friday she saw a stronger case for raising the Fed’s benchmark interest rate, increasing the chances of a possible rate hike after next month’s meeting. In its latest research report on Tuesday, Nomura Holdings expects the city’s home prices to fall a further 10 per cent in medium term, without being more specific. The bearish view is supported by a weakening economy, deteriorating affordability, and declining retail sales. “A string of eye-catching land sales and the positive response to newly launched projects has boosted market sentiment and halted the slide in housing prices,” said Denis Ma, head of research at JLL in Hong Kong . A string of eye-catching land sales and the positive response to newly launched projects has boosted market sentiment and halted the slide in housing prices Denis Ma, head of research at JLL in Hong Kong “Still, we believe that the recent uptick in prices, which have increased 2 per cent in the two months since June, will only be temporary because of several factors.” However, sales in the primary market continue to be driven by developer discounting, rebates and financing, he said. According to JLL estimates, an estimated 15,000 units are currently awaiting pre-sale consent, more than twice the roughly 7,000 units sold in the primary sales market so far this year. “While housing prices may continue to stabilise, near term, we still believe the market will see a further 15-20 per cent correction from current levels, before bottoming out,” said Ma. Home prices have fallen 9.4 per cent from a peak in September last year The city’s housing market was widely expected to over decline in the next two years, but sentiment has been picking up since June. According to Centaline Property Agency, the number of home sales in the first 24 days of August rose 33.5 per cent compared with July, the highest in 13 months. Sales values rose 44 per cent during the period.