By South China Morning Post | Created at 2024-09-30 02:37:29 | Updated at 2024-09-30 05:23:48
2 hours ago
Investors may remain on the sidelines of Hong Kong’s property market because banks’ prime-rate cuts thus far are insufficient to serve as a catalyst and home prices are set to continue their slump, according to industry experts.
“The current interest rate is not a turnaround,” said Professor Chau Kwong-wing, director of the Ronald Coase Centre for Property Rights Research at the University of Hong Kong, adding that yields for 10- to 30-year US treasury bonds have yet to drop. “I would not say an interest-rate-cut cycle has begun.”
Property investments are long-term, but the current interest-rate cut is more likely short-term, he said. “Therefore, we won’t be seeing many investors entering the market.”
On September 19, the Hong Kong Monetary Authority (HKMA) began a policy easing cycle by following the US Federal Reserve’s half-percentage point cut of its base interest rate, the first reduction in four years. Hong Kong’s de facto central bank adjusts its own policy based on what the Fed does to keep the local currency’s peg to the US dollar.
The cut paved the way for Hong Kong’s commercial banks to trim their rates by a quarter point for the first time in nearly five years, which in turn translates into savings for borrowers whose loans are tied to prime rates.
