BofA predicts 25% plunge in Hong Kong home prices

This due to rising supply and rising interest rates.

Bank of America Corporation Merrill Lynch forecasts prices will fall 5% this year and a further 15% in 2014. On the other hand, UBS AG said it expects prices to drop by 5% in 2013 before dropping 15% to 20% next year.

Hong Kong home prices have fallen about 3% since March and transactions are at the lowest in almost two decades due to very tough government measures to curb runaway prices.

Prices have more than doubled since early 2009 on record-low mortgage rates; a dearth of new housing supply and an influx of mainland Chinese buyers.

Analysts believe the housing market has peaked and that the 20% to 25% drop will probably bring prices back to the 2011 level.

Hong Kong developers completed 48,936 homes from 2008 to 2013, the fewest in any five-year period since data became available in 1985. Home transactions this Q3 have fallen to the lowest since the government began providing data in 1996.