Slower US rate hikes help HK homeowners: analyst
A property analyst on Thursday welcomed the news that the US Federal Reserve is slowing the pace of interest rate increases, easing the pressure on homeowners in Hong Kong amid a sharp rise in the number of negative equity cases. The Fed on Wednesday announced a rate increase of a quarter of a percentage point, the lowest since March last year. Hong Kong's currency link to the US dollar means the cost of borrowing in the SAR tracks US rates, with the Hong Kong Monetary Authority confirming on Thursday that the Base Rate here would be set at 5 percent. Speaking on RTHK's Hong Kong Today programme, Hannah Jeong, head of valuation and advisory services at Colliers Hong Kong, noted official figures released this week showing that 12,000 homes are now worth less than the loans secured against them. She said the number remained far below the 106,000 negative equity cases seen during the SARS epidemic in 2003, but warned that property prices had increased sharply over the years, so the sums involved had tripled. "The value at that moment was only HK$24 billion in terms of aggregated value of those [properties in] negative equity," she told RTHK's Ben Tse. "But at this time, 2022 fourth quarter, the value is HK$66 billion, so in terms of amount it's quite significant." Figures released by the HKMA on Tuesday show that 12,164 homes were in negative equity at the end of December, compared to just 533 cases at the end of September and 55 at the end of June. Jeong noted that investors in particular were under pressure because rental yields were not high enough to cover mortgages. She expects home prices, already at a five-year-low, to fall by a further 5-10 percent this year, though she anticipates the situation will stabilise in the second half of the year.