Property market may turn after seven years of decline

Cycle-low HIBOR and CCL Index boost favourable market environment.

Morgan Stanley is optimistic the Hong Kong property market will see the onset of an upcycle, which could last four to five years, after seven years of decline. 

In its Asia Pacific Insight, Morgan Stanley said home prices in the city have started to stabilise, driven by the following factors: “(1) more contribution from mainland home buyers; (2) continuous efforts on talent attraction; (3) reviving capital markets; (4) recent sharp decline in one-month HIBOR.”

The cycle-low HIBOR at 0.5% and a likely US rate cut helps demand and positive carry boosts investment.

Hong Kong home prices performed well year-to-date thanks to mainland buyers' contribution and strong Hang Seng Index.

Meanwhile, the removal of stamp duty from February 2024 and recent strong sales for mega projects lifted market sentiment.

In the same report, Morgan Stanley noted that Hong Kong and US property prices should do better than Singapore.
Developers’ stock has considerable growth potential due to strong balance sheets and high dividend yields.