A general view of residential buildings in West Kowloon District, Hong Kong on April 11, 2023. (ANDY CHONG / CHINA DAILY)
Hong Kong property prices are expected to decline further as the US Federal Reserve’s latest rate hike brings pressure to bear on the market, according to real estate experts.
The prediction came after the Fed raised its benchmark interest rate by a quarter-percentage-point to a new target range of 5.25 percent to 5.5 percent, reaching its highest level in 22 years.
Louis Chan Wing-kit, CEO of the residential division at real estate agent Centaline Property, said on Thursday that the Fed’s latest decision was in line with market expectations but also left the door open to further increases in September
Louis Chan Wing-kit, CEO of the residential division at real estate agent Centaline Property, said on Thursday that the Fed’s latest decision was in line with market expectations but also left the door open to further increases in September.
ALSO READ: HKMA raises base rate to 5.75% after Fed hike
“The US will probably raise rates again this year, and even if it doesn't, the interest rates will not drop. That means the second half of the year will show a clear downward trend in property prices,” he added.
The local housing price index fell for two consecutive months as of June, hitting a four-month low, statistics from the Rating and Valuation Department show.
The private residential price index for June was down over 0.5 percent month-on-month and nearly 8.6 percent year-on-year respectively. That marks a reversal from the 4.3 percent rise in overall housing prices in the first half of the year compared with a year earlier.
Martin Wong, director of research and consulting for Greater China at global property consultancy Knight Frank, attributed the reverse to high borrowing costs, insufficient purchasing power, and stockpiling of new properties.
READ MORE: HK's love affair with real estate endures even in tough times
“The main theme of the housing market this year remains ‘clearance of inventory’. It is expected that developers will be more aggressive in reducing prices and selling properties in the coming months,” Wong said.
