Moody’s turned to sing good, this year’s property price rose 10%

The property market in Hong Kong has soared this year, and the forecast of major banks and rating agencies has also turned. Moody’s report last year pointed out that under the macro environment and capital market instability, it is expected that property prices in Hong Kong may fall by at least 10%. However, Moody’s recently launched a report but changed its name, mentioning that the property market rose by 8% to 10% this year, mainly because of limited land supply, local population growth, and residential properties dominated by large developers.

Worry about China’s economic slowdown

However, Moody’s also mentioned that the potential credit crunch and China’s economic slowdown will lead to a decline in property prices. In particular, Chinese capital may reduce its inflow into the local property market, which will affect property prices, thereby weakening public consumption and construction activities. The reduction will eventually lead to a healthy decline in government credit.

Moody’s pointed out that Hong Kong banks have the ability to cope with falling property prices. In particular, many prudential regulatory measures have been introduced in the past, but some non-bank financial institutions, such as developers, and general wealth, are increasingly taking on the role of the mortgage market. Its lending model is subject to higher risks.

Finally, Moody’s mentioned that the fall in property prices will affect the government’s land revenue. However, Hong Kong’s fiscal stability, abundant reserves and low debt ratio are strong against the sharp downturn in the property market. If the Asian financial turmoil hits in 1997, government revenue will decrease by 4.4%.