Fed rate increase to cool Hong Kong property prices

Hong Kong has been experiencing high property prices due to demand from Chinese buyers, low mortgage-rates and tight housing supply, however, the increase in US interest rates is expected to cool the market. The rate rise will affect Hong Kong in particular, given its currency is pegged to the US dollar. In addition, the government's announcement of new housing units is also likely to help push down property prices in Hong Kong, with analysts predicting a 5%-10% drop in luxury and mass home prices over the next few years due to new housing supply entering the market. 

The skyline showing the Central district of Hong Kong as the housing sector of the city is expected to take a hit from the decision by the US Fed to raise interest rates for the first time in almost a decade, given the peg between the Hong Kong dollar and the US greenback, forcing the territory to adjust every time US interest rates moves. Photo: AFP