(Bloomberg) -- Hong Kong’s residential property prices are expected to increase this year after the removal of Covid restrictions and the border reopened with mainland China, according to S&P Global Ratings. 

A price jump of between 5% to 8% is possible in 2023, clawing back some of the 16% slump in 2022, S&P analyst Edward Chan said in a research note on Wednesday. The renewed growth is “supported by solid pent-up demand,” said Chan. Buyers could pile in “on the back of an improved economic outlook.”

Chan expects prices to rise slightly or remain unchanged for the rest of the year due to high inventory and a potential supply spike next year. Primary residential property transaction volume is forecast to increase to 15,000-17,000 units in 2023, from 10,315 units last year. 

Prices for used homes increased by more than 6% since the beginning of the year, data from Centaline show. Major developers’ new-home sales are set to rebound this year with stronger demand from mainland Chinese following the removal of border controls. 

Developers could cut prices further to boost sales if interest-rate rises curb housing affordability, Chan said.

(Updates with additional comments from analyst in the third paragraph)

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