Concerns that Hong Kong’s residential property prices could take a hit from any moves by the Federal Reserve to begin tapering its asset purchases might not pan out, analysts say.
After years of break-neck advances, with Hong Kong’s home prices more than doubling since 2008, many analysts have predicted sharp falls next year, in part on expectations there will be less liquidity sloshing around in the market after the Fed eases back on the easy money tap – a move also expected to push up interest rates.
But some are not convinced tapering will affect residential prices much.
“Residential property prices act more like short-duration assets, given their buyers’ funding reliance on short-term floating rate mortgages. A steeper yield curve, driven by higher long-term rates, will have limited impact on the immediate mortgage costs for a prospective homebuyer,” said Andrew Lawrence, an analyst at CIMB, in a note last week.
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