Hong Kong property stocks were downgraded by Goldman Sachs Group Inc., which predicts a 20 percent decline in home prices as borrowing costs rise, reports Bloomberg.
The drop will be “driven chiefly” by a potential 150 basis points to 200 basis points increase in interest rates and the “limited prospect of any loosening of government cooling measures in the near term,” Goldman Sachs property analyst Justin Kwok said in a research note Thursday. The Wall Street bank cut the Hong Kong property sector view from attractive to neutral, saying that “tough conditions of high prices and low volumes” will persist.
Hong Kong property prices have declined and sales tumbled to a 25-year low in February amid economic uncertainty. The number of the city’s homeowners with apartments worth less than their mortgages soared 15 times in the first quarter, according to the Hong Kong Monetary Authority. Home prices in the city dropped about 12 percent from a peak in September through April, according to data compiled by Centaline Property Agency Ltd.