Hong Kong home prices are forecast to decline by as much as 5% by the end of the year, once seven of the territory’s major lenders increase mortgage rates this week. The lenders set to announce rate hikes by a maximum of 50 basis points are HSBC, Standard Chartered Bank, Bank of China (Hong Kong), Hang Seng Bank, Bank of East Asia, Citibank, and China Construction Bank (Asia).

The SAR’s biggest lender, HSBC, will increase its mortgage rates to as much as 4.125%, up from 3.625%, starting September 18, according to a Reuters report. An article in the South China Morning Post states that China Construction Bank (Asia) plans to revise its mortgage rate to 5.125%.

a man and woman stand outside a real estate in hong kong and reas the listings
Mortgage rate increases will cause private property prices to fall later this year (© Chitoern Tamiha via WikiCommons)

Citibank will also reportedly implement a similar rate increase, starting September 20. The banks’ new rates will only affect new loan applications, and not impact existing home loans.

The current predictions are in line with a report published by marketing firm JLL in July 2023, which forecast that home prices would drop by 5%-10% in the second half of the year. Joseph Tsang, Chairman at JLL in Hong Kong, said, “[The] Hong Kong housing market is now having the longest price adjustment since 2008 and the market has not found a bottom.”

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While Hong Kong is still one of the most pricey real estate markets in the world, property prices have fallen over the past few years, with the 2023 Asia Pacific Home Attainability Index stating that the city’s private housing market has reverted to 2017 levels.

This development is attributed to the drop in Hong Kong prices due to “a significant increase in mortgage interest rates in line with the US interest rate increase, a net outflow of population, and a less optimistic view on the local property market.”

Header image credits: SAKDAWUT14 via Canva

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From the Middle East to the Far East and a couple of places in between, Anjali has lived in no fewer than seven cities in Asia, and has travelled extensively in the region. She worked as a lifestyle journalist in India before coming to Hong Kong, where her favourite thing to do is island-hopping with her daughter. You can check out her musings on motherhood, courtesy her Instagram profile.

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