Fed rate hike could burst HK property bubble

Hong Kong

BUOYED by record-low borrowing costs, a Hong Kong housing boom has seen prices more than double in six years, making it one of the world's most expensive property markets, but analysts warn a US interest rate hike could send valuations plunging.

The expected hike by the Federal Reserve has also renewed debate on whether Hong Kong should maintain a decades-old peg with the US dollar, as its ties with China grow ever closer.

At the height of the global financial crisis in 2008, the Fed slashed interest rates to near zero and introduced an unprecedented bond-buying scheme that effectively kept long-term borrowing costs down.

With Hong Kong bound by US monetary policy, this fuelled a borrowing spree in the city that helped feed a surge in property prices - making it one o…