A 10% drop in prices could put Hong Kong buyers into negative equity
Hong Kong developers have been offering home finance schemes over the past two months in an attmept to boost sales, however if home prices drop by 10% their offer will put hundreds of "marginal" buyers in danger of falling into negative equity. Some developers are trying to entice buyers by offering up to 95% of home loans through wholly-owned financial instititions. Younger demographics, first-time buyers and the financially vonerable are likley to be the ones agreeing to these loans, meaning they will fall into negative equity if prices decline 5 to 10%. This is of great concern considering that some investment banks have forecasted a 10-30% fall in house prices from now to 2017. 

Villa apartment in Hong Kong as developers offer up to 95 per cent loan financing which could put buyers in negative equity if home values fall 10 per cent in the city. Photo: May Tse