With Hong Kong’s property market reeling from falling deals and prices, an uptick in rates will dampen mood further, analysts say
- Deals have fallen by nearly half since earlier this year, which are expected to pressure prices further, market observers say
- The headwind of high interest rates will only begin to ease in 2024, Knight Frank’s Martin Wong says
An elevated interest-rate environment is likely to weigh on Hong Kong’s secondary housing market until next year, given the possibility of further rate hikes by the US Federal Reserve and its consequent impact on mortgage rates in the city, analysts said.
Higher interest rates have taken a toll on the transaction volumes of lived-in homes, which have fallen 40 to 50 per cent of this year’s weekly average, according to executives from two leading Hong Kong property agencies. They expect the high rates to push prices further down in the short term.
“There are still many uncertainties about whether the interest rate will peak, [as a result] the wait-and-see sentiment in the market will continue,” said Louis Chan, the Asia-Pacific vice-chairman and chief executive of the residential division at Centaline Property Agency.
Home prices may fall by up to 5 per cent in the third quarter, he added.
The possibility of mortgage rates rising further has not been ruled out. The Fed, which held rates steady for the first time after 10 consecutive hikes since March 2022 to control inflation, sees one or two more increases.
