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The city’s real estate industry had been battered, with several listed property developers seeking to renegotiate the terms of loans, said Karl Chan, head of Hong Kong property research at the US investment bank. However, there was no reason the market could not return to peak form, with prices and rents of homes, offices and retail spaces setting historic highs, he said.
“If the Chinese economy sees a big boom again, I won’t be surprised if the Hong Kong property market goes back to the old days,” he said. “But for that, we have to be pretty patient.”
Property prices hit a peak before an economic slump that began in 2019 when the city was hit by social unrest followed by the Covid-19 pandemic. Housing prices fell 28.4 per cent as of March this year from an all-time high in September 2021. However, they increased for four straight months to July, narrowing this year’s price decline to 0.45 per cent.
The US Federal Reserve is widely expected to restart its easing policy with a quarter-point rate cut this month. As Hong Kong pegs its local currency to the US dollar, the city’s monetary authority is set to follow suit, easing pressure on commercial property owners and encouraging homebuyers.
Yet headwinds for the property market remained, Chan said. Developers were still facing an abnormally large supply of unsold flats, and the elevated interest rates were causing a negative-carry situation, whereby mortgage rates were higher than rental yields, he said.
