Yikes…
When the slump finally comes, home prices could fall by half
In the middle of last year housing prices in Hong Kong were almost 30 per cent higher than they would have been if the city’s real interest rates had been in line with their pre-crisis average. Since then, home prices have climbed by another 10 per cent. That implies prices will have even further to fall – roughly 40 per cent – in two or three years when interest rates finally begin to rise again.
Except that price swings generally overshoot. And then there is the prospect of ramped-up supply, with some 25,000 extra new flats a year reaching the market just as rates go up.
