Banks in Hong Kong have succeeded in curbing home prices by raising mortgage rates, signalling that the real estate market may have peaked.
HSBC Holdings Plc, which manages two of the city’s three largest banks in terms of consumers, is among the lenders who sped up mortgage rate increases in April, as liquidity dried up.
According to the Land Registry, the home price index has stalled since 20 March, while sales numbers in April dropped 37.6 percent from the previous year to a two-year low.
The government has been pressured to cool the property market, which is the priciest in the world, according to Savills Plc.
In November, it imposed a number of property cooling measures, including the release of more land and higher deposit requirements. However, these measures have failed to control what the Hong Kong Monetary Authority warned as a “credit-fuelled property bubble.”
“The government measures had limited impact,” said Simon Lo, Hong Kong-based head of research at Colliers International.
“The only thing that has an immediate impact on the market, save for major external shocks, is interest rates.”
Andrew Lawrence, a Hong Kong-based analyst at Barclays Capital, is one of those who believe that the real estate market in Hong Kong has peaked.
He added that property prices may decrease 10 to 20 percent in 2012 and an additional 10 percent in 2013, on increasing mortgage rates.
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