New | China buyers to undergird Hong Kong’s home prices, Standard Chartered says

Hong Kong’s home prices are unlikely to see significant fall amid solid demand, despite the increasing interest rates and the government’s measures to curb growth, Standard Chartered says.

“I can’t see Hong Kong’s property prices falling too much considering the demand and supply, and mainland investors are still buying overseas assets,” said May Tan, chief executive for Hong Kong at Standard Chartered Bank.

Analysts have expected that Hong Kong’s property prices to tumble after the US Federal Reserve’s move to increase interest rate by 25 basis points last Thursday, which was followed by the Hong Kong Monetary Authority, the city’s de facto central bank.

Hong Kong’s commercial banks have kept their prime lending rates unchanged, but home buyers are set to face higher costs on mortgage loans next year as the Fed foreshadowed raising interest rates for another three times next year.

Banks such as HSBC, Bank of China Hong Kong and Hang Seng have kept the prime lending rate at 5 per cent, while Standard Chartered, Bank of East Asia and Dah Sing Bank have maintained theirs at 5.25 per cent.

Althought the bank didn’t increase its lending rate, Tan said there’s little room for the bank to offer more preferential mortgage rates. However, she is relatively optimistic about the property market as she said investors are still seeking to allocation assets to properties which offer reasonable return on investment.

In addition to the growing interest rates, the Hong Kong’s recent measures, including an increase in stamp duty that took effect on November 5, have put pressure on the city’s real estate sector.