21 November 2014 - Credit Suisse forecasted in a report that Hong Kong’s property prices will drop 15% in 2015 under an increasing unemployment rate, rising interest rates, and competitive pricing by developers.
The bank expected the Fed to increase the US interest rate by a quarter point in the second quarter of 2015, followed by another half point in the latter half of the year. Given the pegged exchange rate, borrowing costs in Hong Kong will escalate and buyers in the property market may be dissuaded. Taking a similar view, Deutsche Bank expects local property prices to drop by 20% next year.
In contrary, Mizuho Securities Asia believed that Hong Kong’s property prices will not fall unless the interest rate is raised to at least 1.5%. They anticipate property prices will continue to climb next year.
CEO of OKAY.com Joshua Han Miller expressed optimism about the market in a recent interview with Yahoo Finance. He commented that rising interest rates are a sign of economic recovery, which are almost always accompanied by a rise in the real estate market. “Only if interest rates become high due to perceived economic overheating, will the market react negatively. This is unlikely to happen in the short term.”