"Hong Kong Housing Prices Fall Most in 6 Years Since 2016"

Goldman Sachs "Forecasts 30% Decline in Residential Real Estate Prices from 2021 to 2023"

[Asia Economy Reporter Koo Chae-eun] According to a recent survey, Hong Kong housing prices, considered among the most expensive in the world, have recorded their largest decline in over six years.

On the 7th, Bloomberg reported that the existing home price index compiled by real estate brokerage Centaline fell about 2% compared to the previous week as of the 30th of last month. This index dropped the most since March 2016, reaching its lowest level since December 2017.

Previously, amid the global ultra-low interest rate environment, Hong Kong's real estate market had surged for several years, with this index rising more than 500% from its low point in 2003 to its peak last year.

However, following the large-scale protests in 2019, an exodus of immigrants leaving Hong Kong, economic growth slowdown, and the recent rise in benchmark interest rates have combined to cool the real estate market, causing this index to plunge about 14% from last year's peak.

In particular, due to the Hong Kong authorities' dollar peg system linking the Hong Kong dollar's value to the US dollar, the benchmark interest rate has been raised four consecutive times by 0.75 percentage points each up to this month, reaching around 4.25%, in line with the US. This has led to a sharp increase in mortgage interest rates.

Wall Street investment bank Goldman Sachs has forecasted that residential real estate prices in Hong Kong could fall by about 30% from last year through next year.