An imminent rise in interest rates in the United States next week could quicken the correction in Hong Kong home prices, which have bounced back to near record levels last month, according to industry experts.
Analysts estimated that a rate tightening could result in Hong Kong home prices falling 5 to 15 per cent for the next 12 months.
The International Monetary Fund (IMF) said on Wednesday that stretched property valuations mean Hong Kong’s economy is vulnerable if interest rates rise faster than expected.
Centaline Property Agency expects residential prices to drop 5 per cent before Chinese New Year, which will begin on January 28, 2107. Meanwhile, Citi Bank predicts a 15 per cent plunge in home prices next year.
“Home sales in the primary residential market will drop to 400 deals this month and further plunge to 100 in January,” said Louis Chan Wing-kit, managing director at Centaline Property Agency’s residential department. “Most developers will not release new projects this and next month as Christmas and Chinese New Year are approaching.”
His forecast for new home sales means an 81 per cent drop from the 2,216 home sales in November, according to Land Registry data.