Hong Kong Property Investors Hold Back Despite Interest-Rate Cut; Experts Predict Continued Market Slump

Hong Kong real estate investors remain cautious despite interest rate reduction not enticing enough

An expert notes that it's premature to claim that an interest rate reduction cycle has started. Consequently, the market won't be flooded with many investors.

The expert reiterates that it's too early to assert that we've entered an interest rate reduction cycle and as a result, we shouldn't expect a surge of investors in the market.

Investors could continue to stay uninvolved in Hong Kong's real estate market as the reductions in banks' prime rates are not enough to act as a stimulant. Furthermore, housing prices are expected to further decrease, say industry professionals.

Professor Chau Kwong-wing, who heads the Ronald Coase Centre for Property Rights Research at the University of Hong Kong, stated that the existing interest rate does not signify a reversal. He further added that the returns on US treasury bonds, ranging from 10 to 30 years, have not decreased yet. He dismissed the idea that a cycle of reducing interest rates has started.

Investing in real estate is usually a long-term endeavor, however, he stated that the recent decrease in interest rates is probably temporary. "As a result, we don't anticipate a large influx of investors in the market."

On the 19th of September, the Hong Kong Monetary Authority (HKMA) initiated a cycle of policy softening, mirroring the US Federal Reserve's half-percent decrease in its fundamental interest rate, which was the first decline in four years. The HKMA, which serves as Hong Kong's unofficial central bank, modifies its own policy in line with the Federal Reserve's actions to maintain the local currency's linkage to the US dollar.