Hong Kong’s economy will grow 2.6 percent this year and 2.8 percent in 2025, bolstered by a potential recovery in the local real estate market and supportive measures from the central government, Dah Sing Financial Group has forecast.
According to the report released on Wednesday, Hong Kong’s property market is showing signs of recovery, with prices and sales rising.
Mortgage rates in the city dropped to below 4 percent following the United States’ interest rate cuts of 50 basis points in September and 25 basis points in November. The Hong Kong Monetary Authority’s move in October to relax the maximum loan-to-value ratio for residential properties contributed to this recovery, said Gary Wan, principal economist and strategist at Dah Sing Financial Group.
Figures from Centaline Property, a real estate company in Hong Kong, showed that sales in November for new homes surged 56 percent and second-hand homes nearly 24 percent, from the previous month.
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But developers might take advantage of the market stabilization to launch new projects or offer discounts, which could limit price increases for second-hand homes, Wan noted, and said he expects property prices in Hong Kong to rise less than 5 percent in 2025.
The central government’s economic measures could also help Hong Kong’s economy. The annual Central Economic Work Conference held on Dec 11 and 12 in Beijing laid out nine major tasks for 2025, such as boosting consumption, increasing domestic demand, fostering technological innovation, and stabilizing the property and stock markets.
The central government used to take a gradual approach, so the large-scale financial measures announced this time demonstrate its strong commitment to stabilizing the economy, Wan said, adding that the effectiveness of the measures may take weeks or months to show.
Hong Kong’s export growth, for instance, has slowed, but the bold measures from the mainland could help offset the negative effects of geopolitical issues and other challenges, he said.
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If these economic initiatives prove successful and bolster business sentiment, the Hang Seng Index — the benchmark of Hong Kong’s stock market — could rise to 23,100 points in the first half of next year, Dah Sing Financial Group forecasts.
The index has been stuck below 20,000 points for a while, after the central government’s economic stimulus measures announced at the end of September helped it above 23,000. Wan said the bounce was short-lived, as the initiatives did not specifically target domestic demand, and Donald Trump’s win in the US presidential election in November dampened sentiment in the trade sector.
In mid-November, the Hong Kong Special Administrative Region government revised its economic growth forecast for this year to 2.5 percent, from a range of 2.5 to 3.5 percent in August.
