Hong Kong’s property sector may face dire predictions of a crash after the breakneck pace of price increases in recent years, but that wouldn’t be an Armageddon scenario for the economy, market watchers said.
“With the Federal Reserve set to tighten policy this year and growth likely to slow further in the mainland, there are rising concerns about a possible collapse in house prices,” Chang Liu, an economist at Capital Economics, said in a note Tuesday. “While the economy would be weakened if this happened, we would not expect to see a severe and protracted economic downturn.”
Hong Kong’s property prices have more than doubled since 2009, pushing them to levels higher compared with average incomes than prior to the 1997 crash amid the Asian financial crisis, he said. In December, Hong Kong’s private home price index climbed to a record high, up 13 percent on-year, after rising for nine straight months, according to official data released Thursday.
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