Experts mixed on property price trends

Citibank expects Hong Kong's property prices to fall up to 10 percent this year amid higher mortgage rates but Knight Frank believes they will rise up to 5 percent as market sentiment improves.

Expected aggressive US interest rates hikes will push up Hong Kong interbank offered rates, and therefore, the costs for homeowners while emigration is also projected to exacerbate the fall, said Citi economist Adrienne Lui Chi-ngan, who believes it may take six to nine months before the property market can fully digest these negative impacts.

The one-month Hibor rose to 0.52 percent yesterday, the highest since September 2020, while the 12-month rate hit 2.85 percent, the highest since 2008. "Rising interest rates have played a part in cooling what was a very hot property market back in 2021, with prices down from their historical peaks," said Moody's Analytics economist Heron Lim. Prospective homebuyers will be deterred from buying homes and "on the whole, rising interest rates will cool the market," he said.

Lim expects the one-month Hibor to rise to 2 percent by the end of this year.

However, Knight Frank said that with the pandemic under control and under the leadership of the new government, market sentiment will improve in the second half, with prices rising by 3-5 percent throughout the year.

Meanwhile, at least seven new projects are set to be put on the market this weekend including Henderson Land Development's (0012) Baker Circle Dover in Hung Hom, which has been 7.8 times oversubscribed with 1,600 checks. Hang Seng Bank (0011) said it will offer green mortgage loans for buyers of the project.

And Sun Hung Kai Properties (0016) said it has signed a five-year sustainability-linked loan facility with 16 banks with a size of up to HK$20.7 billion.