(Bloomberg) -- Property developers are cutting prices in Hong Kong to lure buyers amid the increasing downside risks in the world’s least-affordable housing market.
Vanke Property Overseas Ltd. released 231 units of its new project Le Point in Tuen Mun Friday, with prices as low as HK$9,878 ($1,265) per square foot, the lowest in the primary new-home market in about two years, according to a Ming Pao report Saturday.
Hong Kong’s housing market has shown signs of “cooling off in the past two weeks” as downside risks increase, with borrowing costs in the city likely to rise this month in line with the U.S. Federal Reserve’s upward trajectory, Financial Secretary Paul Chan said earlier this week. Hong Kong’s secondary private residential property prices declined 0.23 percent Sept. 10 to 16 from a week earlier, the second consecutive weekly decrease, Centaline Property Agency said on its website.
Rising new house supply in September adds further pressure on property prices. Nearly 6,000 units from eight residential projects will be offered in September, up 20 percent from August, the most in five years, the Hong Kong Economic Times said late last month.
Bearish sentiment is mounting for Hong Kong’s property market after a 15-year bull run. Citigroup Inc. and CLSA Ltd. are among those forecasting declines in home prices as stocks tumble and households brace for the first prime-rate increase in a decade. Developers have begun to offer perks such as free rail tickets to attract buyers. Some are selling apartments at steep discounts, and others aren’t providing mortgages due to concern that rising borrowing costs may increase defaults.
The expected U.S. interest rate increase and Hong Kong prime rate hike also fueled the volatility in the foreign-exchange market in the former British colony. The Hong Kong dollar rose 0.6 percent Friday, the biggest gain in 15 years, triggered by factors including rising local borrowing costs, a plan by China to issue debt in Hong Kong, and a buying stampede by short sellers hit with stop losses.
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