Hong Kong's property boom is quietening down, according to Credit Suisse, while Standard Chartered Bank denied offering 100 percent mortgages to staff.
Credit Suisse projects home prices to rise 3 percent this year - compared to 13 percent in 2017 - as the risk of higher interest rates and increasing housing inventory grows.
Faster supply of new units will suppress price growth in the "mid-to-long run," said analyst Susanna Leung, advising investors to favor developers with strong sales in recent years.
The brokerage's top picks are CK Asset Holdings and New World Development.
"Overall demand and price growth have been slowing down since 2017," Leung wrote in a note yesterday. "Any increase in the prime rate will have a wider impact as developers' financings are typically benchmarked to the prime rates."
The Hong Kong dollar's one-month borrowing cost rose above 1 percent in November for the first time since the 2008 global financial crisis, putting pressure on local lenders to boost the prime rate - a key measure that influences mortgage rates.
Supply of new units should reach 24,300 this year, 21 percent above last year's level and 35 percent above targeted levels, according to Leung. That compares with 18,646 primary units sold last year.
Developers with farmland and older landbank should be less vulnerable to the impact of rising supply, Leung wrote, while upgrading realtor Midland Holdings to neutral.
Recently, a 1,109 salable square foot, three-bedroom home from The Belchers in Western District sold for HK$28.5 million, or about HK$25,700 per ssf, the first deal at the estate this year. The vendor bought the flat for about HK$9.22 million in 2004, said Midland Realty.
Meanwhile, a Standard Chartered Bank spokesperson said the lender does not offer 100 percent mortgage loans to its staff and instead approves mortgages according to Hong Kong Monetary Authority guidelines.
The clarification comes after a transaction record showed in the Land Registry that a 578 ssq flat at One Kai Tak was sold for HK$11.16 million, with a mortgage loan for that amount granted by the lender.
Standard Chartered claimed the record was inaccurate, and said it does not comment on any client's personal information. It has also asked the Land Registry to amend the information accordingly.