Hong Kong’s short-lived property worth decline is nearly over, analysts say

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The latest slide in Hong Kong’s residential property costs might quickly be ending.

Simply 4 months after town topped Swiss Financial institution UBS’ chart of the world’s most overvalued housing costs, analysts are calling a backside after a brief correction.

Property is a key driver of the financial system in land-scarce Hong Kong, the place some 7.four million individuals are packed onto small islands and a jagged, mountainous peninsula that borders mainland China.

Analysts final 12 months predicted residential property costs within the metropolis would decline between 15 p.c and 20 p.c, pressured by declines within the Hong Kong and mainland inventory markets, a weakening Chinese language yuan and rising native borrowing prices.

Costs have already come down 10 p.c since their peak in August final 12 months, CLSA property analyst Nicole Wong wrote in a report final Wednesday

However now, she stated, property may acquire from a stabilization for Hong Kong’s inventory market and the Chinese language yuan. On high of that, Wong added, the U.S. Federal Reserve’s “tame fee steering” might push buyers in Hong Kong to hunt returns in larger yielding investments corresponding to property.

Hong Kong’s foreign money is linked to strikes within the U.S. greenback and rising U.S. rates of interest imply that Hong Kong charges will observe swimsuit — town’s financial authorities transfer in lock step with their counterparts on the Fed.

However sharp declines in stateside inventory markets within the fourth quarter of final 12 months and worries concerning the outlook for U.S. and international financial development have resulted in expectations for a slowdown within the American central financial institution’s tempo of fee will increase.

“Market dynamics have shifted,” Wong wrote, predicting that costs will backside out over the following couple of months earlier than rising by as a lot as 15 p.c.

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