Hong Kong home prices headed for 15% gain this year, Midland forecast says

Hong Kong property prices are expected to rise by 15% this year, according to forecasts from local agency Midland Realty. Despite this upward trend, the prices remain 16% below their peak in 2021. This optimistic outlook is backed by the belief that Hong Kong's banks will not immediately increase interest rates in response to potential hikes by the US Federal Reserve.

Midland's CEO, Dave Ma Tai-yeung, noted that as the market absorbs external uncertainties, new property launches are speeding up and buyers are returning to the scene. First-hand residential property transactions, which had dropped for two months in June and July, have recovered to over 1,100 units in August. For the final quarter of the year, these transactions are predicted to grow by 50% quarter-over-quarter, reaching 5,100 units, while second-hand market transactions are expected to rise by 10% to 12,700.

Benny Sham, a research analyst at Midland, explained that developers will continue to provide competitive prices when launching new homes, potentially drawing customers away from the secondary market. Eric Tso Tak-ming, chief vice-president at mReferral Mortgage Brokerage Services, added that even if the US raises rates, Hong Kong banks might not immediately follow suit, or could only raise their prime lending rates slightly.

Hong Kong's monetary policy has been closely linked to the Federal Reserve's since 1983, but commercial banks have the discretion to adjust their prime and savings rates. With Chief Executive John Lee Ka-chiu's upcoming policy address, there is speculation that the government may lower the stamp duty threshold for super-luxury homes.

Despite a February budget increase in stamp duty, high-end property transactions have remained strong, with more than 80 sales exceeding HK$100 million in the first eight months of the year, outpacing the previous year's total.