Fed rate hikes can cool heated property market

The IMF described Hong Kong’s property market as booming and overvalued.

Bloomberg reports that house prices in Hong Kong, the world’s most expensive real estate market, could cool next year if the Federal Reserve delivers the rate hikes it has projected, according to the International Monetary Fund.

"If the Federal Reserve’s plans to increase interest rates over the next year materialize, as expected, we should expect a moderate slowdown of house prices in Hong Kong," Sonali Jain-Chandra said in emailed remarks.

Because Hong Kong’s currency is pegged to the dollar, it effectively imports U.S. monetary policy. Higher borrowing costs in the U.S. and elsewhere in the world would increase Hong Kong’s debt burden and suck capital away from the finance hub.

Here’s more from Bloomberg: