Anticipated Decline in Hong Kong Home Prices: S&P Global Ratings' Forecast

S&P Global Ratings predicts a potential 3 per cent decrease in Hong Kong's residential property prices this year, with a drop of up to 10 percent in 2024. 

In its recent report, the company suggested that local developers may resort to price reductions of up to 20 percent to achieve revenue goals. 

Earlier this year, S&P Global had forecast a rise of 5 to 8 per cent in Hong Kong's home prices. However, the latest prediction indicates that prices could remain static or decline by up to 3 percent. 

Furthermore, the agency projects an additional 5 to 10 percent decrease in 2024. This downward trend is attributed to factors such as weak local economic growth, increasing interest rates, and a surplus of flats, all of which are contributing to market pressure. 

S&P Global posits that market-leading developers in Hong Kong might be willing to sell flats at reduced prices to reach sales targets. These developers could potentially accommodate property price reductions of up to 20 percent without crossing financial thresholds. 

If a 20 percent drop in home prices occurs next year, the debt ratios of these developers would likely rise by 0.4 to 0.8 times by 2025 or 2026, according to the report. 

The report also predicts that the number of home sales in Hong Kong for this year will be around 11,000 residential units, lower than the initially projected 15,000 to 17,000 homes.

However, the government's partial relaxation of property stamp duties could lead to a moderate increase in residential transactions next year.

In other news, Henderson Land (0012) intends to release its sales brochure for The Paddington in Sham Shui Po today, with the first price list scheduled for release on Friday. 

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