Focus on Hong Kong investment immigration and stay updated on Hong Kong economic trends: International investment bank Bank of America Merrill Lynch expects that the Hong Kong property market has peaked and that property prices may fall by 25% from their February peak by the end of next year, primarily due to a sharp rise in U.S. Treasury yields and an increase in housing supply, which are driving a significant decline in prices.
Bank of America Merrill Lynch released its latest property market outlook report on the 16th, forecasting a 5% decline in Hong Kong property prices for this year and a 15% decline next year. If calculated from the peak in February of this year, Hong Kong residential property prices may drop by 20% to 25% by the end of 2014.
Karl Choi, Head of Greater China Property Research at Bank of America Merrill Lynch Global Research, stated that Hong Kong property prices have peaked and may see a significant decline next year, mainly due to rising U.S. Treasury yields and an increase in the supply of new primary market properties.
He pointed out that the current U.S. 10-year Treasury yield is 2.7% and is expected to rise to 4% by the end of next year, which will weaken the attractiveness of rental yields and put pressure on property prices. At the same time, many property developers are accelerating the launch of new projects, and the increase in primary market supply will also drive prices down.
Choi believes that the Linked Exchange Rate System has led to low interest rates in Hong Kong, causing the property market to overheat and necessitating measures to reduce speculative and investment demand. Therefore, it is necessary for the Hong Kong SAR government to maintain property market cooling measures.
He stated that unless Hong Kong experiences an economic crisis, it is unlikely that property prices will fall by more than 30%. Even if prices fall by 25% from their peak, the levels will remain high, and the burden on citizens will still be significant. With Hong Kong's sound economic fundamentals, he believes that the decline in property prices will not have a significant negative impact on citizens' wealth or local consumption.