Property Market 'to Fall By Further 10 Percent'

The chairman of a Hong Kong real estate agency says he thinks the property market could fall by a further 10 percent this year, after five major banks in the SAR raised their interest rates for the first time in four years.

"If you look at the market large, you've seen something more of the order of five percent for the first seven months of this year," said Nicholas Brooke, the chairman of Professional Property Services. "We could be looking at another 10 percent by the year end."

Speaking on RTHK's Hong Kong Today programme, Brooke said he also expected the secondary market to bear the brunt of the price falls.

"I think it's going to hit the secondary market to a greater degree if you like," he said. "The secondary market can't depend on incentives."

Brooke said the primary market, for newly-constructed or off-the-plan flats, would see developers maintaining headline prices. But he said developers were also likely to add incentives to attract potential buyers.

Historically, developers have offered sweeteners like second mortgages for buyers who don't have enough for the initial down-payment. They sometimes also offer price discounts for buyers who can pay more cash upfront, as well as low interest rates for the first few years.

The major Hong Kong banks raised their best lending rates on Thursday, after the US central bank, the Federal Reserve, announced at 75 basis point rate increase.