Lukewarm home sales in Hong Kong signal caution among buyers as looming US Fed hike weighs on sentiment
- A third of units at a Yuen Long project and half of units in Wong Chuk Hang sold on Saturday as buyers wait to see if the Fed hikes rates again this month
- Home sales are still expected to improve this month over June owing to more lenient mortgage policies that were revised last week
As of 4pm, 64 out of 188 units of High Park I in Yuen Long had been sold, while 54 of 108 units of La Montagne in Wong Chuk Hang had found a buyer, according to agents.
“The sales of both projects cannot be counted as good, but they are reasonable,” said Sammy Po Siu-ming, CEO of Midland Realty’s residential division for Hong Kong and Macau. “It reflects that the market environment is in a wait-and-see mode after the US Fed’s rate hike in July.”
Consumer prices in the US were up 3 per cent in the 12 months to June, slower than the 4 per cent year-on-year rise in May, according to official data. The US Federal Reserve, however, is still tipped to increase interest rates in the latter part of the month, as monetary authorities in the world’s largest economy try to cool inflation while avoiding a recession.
To keep the Hong Kong dollar pegged to the US dollar, the Hong Kong Monetary Authority (HKMA) typically mirrors the Fed’s moves, meaning homebuyers will face higher mortgage rates once local cash rates are increased.
“The current high interest rate environment will continue to weigh on the residential market,” said Martin Wong, head of research and consultancy in Greater China at Knight Frank. “It would only be potentially better for homebuyers in the second quarter of 2024 when there is a possibility that the US would cut interest rates.”
