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Hong Kong home prices will fall by 10 per cent in 2024, UBS says, amid high interest rates, housing glut
- The Swiss investment bank expects home prices to fall as high interest rates dent demand and an abundance of housing stock boosts supply
- UBS expects the number of negative equity cases in Hong Kong to continue to rise as home prices keep sliding
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Home seekers in Hong Kong can anticipate even more favourable deals in the coming year, according to UBS, as house prices continue to slide.
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The Swiss investment bank expects home prices to decline by 10 per cent in 2024 as high interest rates dent demand and an abundance of housing stock boosts supply.
The unfavourable economic environment and high borrowing costs are likely to prompt developers – many already facing a shortage of cash – to offer flats at discounted rates, UBS said on Thursday.
“The market will continue to struggle for at least another six months before the US Federal Reserve cuts the interest rate,” said John Lam, head of China and Hong Kong property research at UBS, which anticipates the easing to begin in March.
In lockstep with the Fed’s aggressive tightening campaign, the Hong Kong Monetary Authority (HKMA) has raised rates by a cumulative 5.25 percentage points since March 2022, with the base rate now at a 16-year high of 5.75 per cent. The HKMA adjusts its rates based on the Fed’s moves to maintain the local currency’s peg to the US dollar.
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A glimpse inside Hong Kong’s notorious subdivided homes
A glimpse inside Hong Kong’s notorious subdivided homes
The high inventory of completed homes is also likely to push developers to cut prices and sacrifice some profit margin to maintain liquidity.
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