NewHong Kong home prices may peak in 2016 amid rate rises
Current run began in 2003 and will top out in 2016 amid rate rises, says analyst
If history is any guide to the Hong Kong housing market cycle, home prices will peak next year, halting when the US starts raising interest rates.
"Hong Kong property prices are approaching the peak of the cycle as we enter the 12th year of surge," said Raymond Ngai, the head of Greater China property research at Bank of America Merrill Lynch.
Ngai said the last cycle lasted 13 years from 1984 to 1997 while the current cycle began in 2003. If history repeated itself, this cycle would peak next year, he said.
"Home prices have been jumping a lot. An interest rate rise may cause the market to peak out."
Bank of America Merrill Lynch expects the Federal Reserve to start raising rates in September at the earliest, with possibly two increases this year and four next year. Every increase, it expects, will be of 25 basis points.
Ngai said interest rate increases would slow price growth but the impact on the housing market would depend on the extent of the increases.