global interest rates should boost property prices, but any gains in
Hong Kong could be delayed until there is a broader economic recovery
locally and in China
home prices in Hong Kong fell 1.1 per cent in July, the most this year,
as rising interest rates kept buyers on the sidelines
Hong Kong will be
among the first markets where interest rates are likely to fall next
year along with the US, which could potentially boost the city’s
property sector, according to analysts.
With inflation in
the US, the world’s largest economy, showing signs of cooling down,
normalising of interest rates may come earlier than in the UK and the
euro zone, a property agent said.
Hong Kong’s peg to the US dollar means an automatic adjustment to the city’s interest rates alongside the US.
“As rates begin to
fall globally, that will be the trigger for improved affordability and
will provide the conditions for house price growth, so the US and Hong
Kong, in theory, will see prices grow earlier,” the agent said.
said, the conditions for stronger prices also require consumer
confidence and positive household wealth conditions. In the US one can
see how these conditions will be present in the near-term. It may be
delayed in Hong Kong until there is a broader recovery in the local and
wider China economies.”
US Federal Reserve embarked on a path of aggressive interest rate hikes
in March 2022, raising it 11 times to a target rate of between 5.25 per
cent and 5.5 per cent so far. Inflation has generally been brought
under control, with the latest reading at 3.7 per cent in August, still a
long way from the Fed’s 2 per cent target, but much lower than the
40-year high of 9.1 per cent in June last year. These figures have
raised hopes that the US monetary authorities are likely to be swayed to
ease rates sooner
that many other markets.
The Fed’s pause last week is another indication that the rate hike may be coming to an end soon.
the other hand, in the UK and the euro zone, where monetary authorities
have been trying to tame consumer price rises to 2 per cent, inflation
is proving to be stickier.In the UK, the Bank of England has
raised interest rates 14 times since December 2021 to 5.25 per cent,
where inflation cooled to 6.7 per cent in August. In the EU, the
European Central Bank lifted the interest rate to a record high of 4 per
cent on September 14, as inflation hovered at 5.2 per cent last month.
Inflation in the euro zone is predicted to be 5.6 per cent on average in
With Hong Kong
following the Fed, the rate cut moves will be quicker, unlike the UK and
Europe, where it is more likely at the end of 2024, Bailey said, adding
that the falling rates are likely to boost home prices in the US, but
may take some time in Hong Kong.
Lived-in home prices in Hong Kong fell 1.1 per cent in July, the most this year, according to the latest official data.
developers have been extending price cuts at their new project launches
in a bid to dispose of their current stock, with the likes of CK Asset’s
Coast Line project and Villa Garda by Sino Land, K Wah International and China Merchants Land offering discounts of as much as 16 per cent.
Overall, the agent said the “worst” of the uncertainty is likely over for global property markets.
“In 2022, you had a
period when it was clear inflation was rising rapidly,” the agent said.
“No one quite knew the end game, how far it would go on, but now we’re
probably at a point where we’re getting close to the end of the
Global property prices will probably be at their lowest level in the first quarter next year, the agent added.
Besides interest rates, other factors are likely to influence the direction of home prices next year, another agent said.
“In the US, a
supply shortage will keep prices nearly flat over the next six months
and drive increases in home prices by around 5 per cent in 2024,” the
agent said. “In Hong Kong, the slower economy and low transaction
numbers will keep the market sleepy until the middle of 2024.”
For the UK, the
agent said property prices should find their bottom in the first quarter
of 2024 and begin to recover later in the year.
(South China Morning Post)