Hong Kong’s property downturn yet to run its course, with home prices set to decline by up to 10% this year, S&P says
- There is pent-up home-buying demand in Hong Kong, but this will only be released when economic growth stabilises and interest rates start easing, S&P analyst says
- Supply of primary residential units could hit 100,000 in the next three years, compared with 80,000 to 100,000 units from 2015 to 2021, ratings agency says
Hong Kong’s current property market downturn is cyclical and not structural, according to S&P Global Ratings, which expects home prices to decline by as much as 10 per cent this year as elevated interest rates keep demand in check.
“We believe that there is pent-up home-buying demand in Hong Kong, [but] this will only be released when economic growth stabilises and interest rates start easing,” said Wilson Ling, associate director for corporate ratings at the credit rating agency, during a webinar on Monday.
Meanwhile, unsold inventory of new homes is keeping prices in check despite the recent easing of property cooling measures by the government, he said, adding that elevated interest rates were the main reason weighing on demand.
Since March 2022, the Hong Kong Monetary Authority, the city’s de facto central bank, has raised interest rates 11 times to a level last seen in September 2007, in lockstep with the US Federal Reserve to keep the local currency’s peg to the US dollar.
Late last month, Financial Secretary Paul Chan Mo-po scrapped all cooling measures restricting property transactions as he unveiled a budget aimed at restoring the city’s flagging fiscal health, addressing mounting calls from the property and business sectors to ditch the decade-old measures.
The announcement came as lived-in home prices fell for a ninth straight month in January to a level last seen in 2016.
