Hong Kong home prices to face deflation trend by end of year, analysts say
A general downtrend in the city’s housing market is expected by end of year, with one finance academic warning of potential flash crash by as much as 10 per cent in the first quarter of 2019
Hong Kong home prices could slip into deflation by the end of the year, as a cocktail of concerns ranging from the downbeat stock market to trade war fears and rising interest rates take their toll on sentiment, according to market observers.
Home price deflation is likely to set in by December in the form of a single-digit drop month on month, while a sharper 10 per cent decline is possible in the first quarter of 2019 from the prior quarter, said Lee Shu-kam, associate professor in economics and finance at Hong Kong Shue Yan University.
“Home prices may start to fall at the end of the year when market sentiment reverses amid a downbeat stock market and higher interest rates. Fears will grow in the market with more homeowners listing their properties,” Lee said.
“If the market cannot take the pressure from the negative factors, there may be a turning point early next year after which home prices may start to plummet.”
Lee said home prices could also continue to trend upwards depending on how markets viewed the mounting headwinds.
Last week Norman Chan, chief executive of the Hong Kong Monetary Authority, said there was a general expectation that the Federal Reserve would lift interest rates at its September meeting.
