The weakest HK dollar in decades As Interest Rates Soar, But Why?marcuss
Finance 101 tells you that higher interest rates are bad for real estate prices. Since property is a very debt-dependent asset, when interest rates go up, the cost of financing debt used to acquire a property (i.e., mortgages) increases. That’s bad for the demand for real estate – and thus, real estate prices.
What’s more, when you look at property as an investment using the yield it generates (calculated as the total annual rental income as a percentage of the total property value), if a property yields say 3 percent, and interest rates rise, then the yield . . .
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