Hong Kong home prices to drop 20 percent? What are the reasons?
Hong Kong home prices is the highest in the world and it’s always been there for many years. There is one latest prediction that it’s on the way down. Do read about this prediction by Goldman Sachs Group Inc about the Hong Kong property market. There are a few key reasons being stated for this and we need to take note of these because if similar reasons happen, it would also affect the property market here in Malaysia as well.
Article in themalaysianreserve.com Goldman Sachs Group Inc says that residential property values will drop by 5% every year from 2022 to 2025. The reasons include a worsening economy as well as rising interest rates which will hit the demand for homes.
With the current battle with the fifth wave of Covid-19 infections, the effects will hit the financial hub and will contribute to a shrinking economy in the first quarter of 2022. Goldman expects mortgage rates to more than double and be close to 4% in 2024 from about 1.5% currently. According to Centaline Property Agency Ltd. Prices are down more than 3% since the beginning of the year, and are at the lowest in 12 months. Please do read here for the full details: Article in themalaysianreserve.com
Without the economy, there’s no property
Anyone telling you about the property market must also share with you about the state of the economy. If this person says everything bad about the economy and then tells you to buy a property, let’s just note that the person understands little about how the property market moves; it will always be affected by the economy. This is why when the economy is not doing well, the confidence to buy a property will not be present.
In fact banks would also be more conservative because they already have to start making plans to ensure all their lendings are safe and that people who borrowed could continue paying them too. Economic growth drives employment and employment drives demand for good and services including a property. Happy understanding about what Goldman Sachs is really saying which is applicable to all markets and not just Hong Kong.
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