Home News The world’s most expensive housing market could crash by 30%

The world’s most expensive housing market could crash by 30%

by admin
0 comment

Hong Kong’s housing market has weathered political change and the COVID pandemic to remain the most expensive in the world. That is rising interest rates.

Home prices in Hong Kong, the world’s most expensive housing market, could fall by 30% by the end of 2023 compared to 2021 prices. Goldman Sachs analyst Predicted in Tuesday’s memo.house prices are already 8% so far this yearsaid the investment bank.

Other players in the city’s real estate sector warn of decline. Centaline Property Agency, one of the city’s largest real estate agencies, warned on Tuesday that he will be in 2022. real estate sale It could hit a 27-year low.

Hong Kong is currently suffering from an economic downturn. The city is already in a technological recession, with the city government forecasting annual economic growth of -0.5% to 0.5%.

degree of interest

goldman sachs The sharp decline is due to a faster-than-expected rise in Hong Kong’s Interbank Offered Rate (HIBOR), with 90% of Hong Kong’s mortgages tied to this rate.

Hong Kong is raising interest rates in line with the US Federal Reserve. Hong Kong’s de facto central bank, the Hong Kong Monetary Authority (HKMA), its base interest rate rose to 3.5% on Sept. 22, after morning The US Federal Reserve also raised interest rates.

HIBOR set by banks has also increased, with the 3-month HIBOR rate at 3.46%, the highest in 14 years.

Hong Kong has been forced to raise interest rates in line with the Fed to protect the Hong Kong dollar’s currency peg to the US dollar. The Hong Kong dollar trades between 7.75 and 7.85 against the US dollar.

However, if interest rates in Hong Kong are lower than those in the US, traders can borrow money in Hong Kong dollars, convert it to US dollars, and invest in the US to take advantage of its higher interest rates. If traders allow the local currency to sell, the HKD will fall, threatening the peg and forcing the HKMA to intervene.

affordable housing

The city maintained its position as the world’s most expensive housing market through 2019’s civil unrest and the COVID pandemic. In 2021, the median Hong Kong house price was a whopping 23.2 times the median income. according to Urban Reform Institute and Frontier Center for Public Policy think tank. The city has had the world’s most affordable housing for 12 consecutive years.

This is well ahead of Sydney, the second-highest housing market, with a median home price to income ratio of 15.3.

Most Affordable Market in the U.S., According to think tank reportwith a median home price-to-income ratio of 12.6, makes San Jose the fourth most affordable housing market overall.

This story was originally Fortune.com

You may also like