Here's what insulates Hong Kong's property market from rate hikes

Unless there’s a large market crisis, the market is well-shielded from rising interest rates.

Bloomberg reports that ample bank liquidity has buffered Hong Kong’s property market against the risk of rising interest rates and thus, have nothing to fear as interest rates are not likely to rise anytime soon.

That’s according to Hong Kong’s biggest lender HSBC Holdings Plc, which says a key measure -- the aggregate balance maintained by commercial banks -- would need to plunge by $10 billion for local rates to show any substantial gains. 

“Unless there’s some unforeseen political crisis, I don’t see a very substantial outflow of capital out of Hong Kong,” HSBC adviser for Asia-Pacific George Leung said in an interview on Monday.
“To get this amount out of Hong Kong’s banking system it may still take quite a bit of time.”

Even if local rates rise, it’s unlikely home prices will see a large fall amidst a supply shortage as it will take a rate increase of at least 200 basis points to see any material impact on the property market, and only three U.S. rate hikes totaling around 75 basis points are expected this year, Leung added.

Here’s more from Bloomberg: