Hong Kong’s home prices may fall by half in next 10 years, Deutsche Bank says

Home prices in Hong Kong could fall by nearly half over the next 10 years as a rapidly ageing population coupled with rising supply of new flats will dent demand, according to a report by Deutsche Bank.

“We expect vacancy to surge to 9 per cent, from 4 per cent now, and average selling price to slide 48 per cent by 2026 from current level,” wrote property analyst Jason Ching.

As the population ages, fewer households will be able to stretch their mortgages to the maximum tenure of 30 years, the report said.

“We expect only 11.5 per cent of total households will be able to afford an average private housing unit by 2019 from the current level of 16.9 per cent. Moreover, by factoring in upcoming rate hikes, we expect overall affordability to worsen and average selling price to decline by 48 per cent over 2017-26 to restore the supply and demand equilibrium.”

Deutsche Bank’s forecast come after Hong Kong’s top financial officials issued their strongest warning yet to home buyers about escalating risk in residential prices.

Financial Secretary Paul Chan Mo-po said on Monday that “the risk in the property market is very high [and] sentiment in the property market is very exuberant”.