Real estate prices are expected to fall by 20% over the next four years
Goldman Sachs Group Inc. analysts say home prices in Hong Kong will fall by around 20% over the next four years as the deteriorating economy and rising interest rates hit demand.
Residential property values will fall 5% each year from 2022 to 2025, analysts including Gurpreet Singh Sahi said in a March 28 report. The investment bank previously predicted that prices would remain flat this year, then decline 5% in 2023 and 2024 before stabilizing the following year.
Hong Kong’s battle with a fifth wave of Covid-19 infections is hitting the financial hub and will contribute to a contraction in the economy in the first quarter, Goldman economists have said. The government has ordered businesses, including gyms and cinemas, to close and restrict gatherings for the past two months. Some measures should be relaxed at the end of April if the pandemic situation continues to improve.
Social distancing rules will combine with rising unemployment and higher borrowing costs to dampen demand, resulting in lower house prices, the bank said. Goldman expects mortgage rates to more than double and approach 4% in 2024, from around 1.5% currently.
House prices in the city have fallen steadily over the past few months, according to Centaline Property Agency Ltd. Prices have fallen more than 3% since the start of the year and are at their lowest level for 12 months.