Hong Kong's home prices will fall another 10 percent in 2024 and return to 2016 levels after an estimated drop of 5 percent last year, says Morgan Stanley.
The investment bank said that it will take some time for any expected US interest rate cuts to benefit Hong Kong's property market, which means the home buyers still need to pay high interest rates for mortgages.
Moreover, unsold units amounted to 20,000 as of the third quarter last year, a 20-year high, marking a continuous weak market sentiment.
The bank forecast Hong Kong interbank offered rates would increase by about 100 basis points, posing a challenge to companies that bear high debt and are sensitive to changes in interest rates.
It also said Sino Land (0083), CK Asset (1113) and Swire Properties (1972), with strong balance sheets, are expected to raise dividends.
Real estate consultancy Jones Lang LaSalle said Hong Kong's housing market will be in the phase of relative surplus between 2024 and 2027, based on the annual average sales of new homes of 16,400 flats in the past 20 years.
The predictions came as Financial Secretary Paul Chan Mo-po said the property market is facing short-to-medium-term correction but he holds a positive view in the long run.
Meanwhile, Link Real Estate Investment Trust (0823) called on being added to the Connect to facilitate asset allocation for mainland investors, as REITs have rebounded on hopes of an interest rate cut.
Considering a strong revival of Hong Kong retail property market forecast by the real estate investment firm Colliers, and the recovery of Singaporean REITs, Link holds a positive outlook on Asia-Pacific REIT markets.
Cushman & Wakefield forecasts a 5 percent rise in property transactions in the Greater Bay Area as relaxed housing control measures take effect.
