Home prices to rebound 5pc, says Morgan Stanley

Staff reporter

A Morgan Stanley analyst has predicted interest rate cuts to lead to a 5 percent rebound in local property prices and help lift stocks of the real estate sector next year.

Nonetheless, prior to the rebound, home prices would continue to extend the fall from 4.66 percent for the first seven months to 8 percent for the whole year.

Morgan Stanley analyst Nick Lord believes banks in Hong Kong would lower their prime rates by 0.125 percentage point every time the US Federal Reserve cuts the interest rate by 0.25 percentage point.

It is predicted that the actual mortgage interest rates would drop to 3.25 percent by the end of next year.

Interest rate hikes were responsible for the 30 percent fall in home prices since 2021, according to the analyst.

The investment banker believes the correction in local home prices is cyclical and the sector will recover next year amid rate cuts.

Local real estate stocks rose yesterday. Link Real Estate Investment Trust (0823) climbed 3.6 percent to be the best-performing blue-chip stock.

Meanwhile, Hang Seng Bank (0011) and Standard Chartered Hong Kong are understood to have resumed cash rebates for home mortgages, following BoC Hong Kong (2388). The rates for cash incentives vary from 0.1 to 0.2 percent of the loans.

In the primary market, sale of 50 units at Phase 1 of KT Marina in Kai Tak starts today despite typhoon Yagi. The developers including K Wah International (0173), Wheelock Properties and China Overseas Land & Investment (0688) hiked the maximum discounts to 38.5 percent for the selected 50 units.

Also in Kai Tak, Phase 1 of the project on 19 Shing Fung Road was named Double Coast I. The project, jointly developed by Wheelock Properties, Henderson Land Development (0012), China Overseas and New World Development (0017), offers 361 units and sale is planned for this month.

On the other hand, only one new project was approved for presale by the Lands Department last month. It involves a site owned by Chinachem in Sai Kung, on which 40 units are being built.

Developers have also applied for presale consent for a project in Sha Tin. Developed by Wing Tai Properties (0369) and Vanke Overseas Investment (1036), the project provides 240 units.

In other news, the number of completed private homes increased by 13 percent month-on-month to 1,608 units in July, a six-month high.