Nikkei Asian Review: Property stocks fell in Hong Kong on Monday amid revived expectations that the U.S. Federal Reserve might raise interest rates sooner than markets had expected.

Shares in Cheung Kong Property Holdings at one point dropped by 0.85 Hong Kong dollars, or 1.54 percent, to HK $ 54.30. Rivals Sun Hung Kai Properties and Henderson Land Development also declined.

Fed Chair Janet Yellen and other key figures hinted late last week at an early rate hike at a meeting in Jackson Hole, in the U.S. state of Wyoming. An American rate hike means rates would also go up in Hong Kong, as the special administrative region pegs its currency to the U.S. dollar and takes its cue from the Fed in adjusting monetary policy. Investors increasingly worry that higher mortgage and other interest rates could hit sales at property companies.

Hong Kong’s real estate market has been showing signs of resilience after easing slightly from historic high levels. Between August 1 and Sunday, 2,360 newly built homes were sold, an almost 18-month high, the Hong Kong Economic Times said on Monday.

The Centa-City Leading Index, a yardstick for prices of previously owned homes in the territory compiled by Centaline Property, rose in early August by the fastest pace in about 18 months, according to the newspaper.
If the U.S. raises rates, it will certainly affect Hong Kong’s property market negatively, said Sze Tung, an Asset Manager at Victory Securities. The allure of overpriced Hong Kong properties has come down in the past few years, Tung added.

Investors’ money will flow out of Hong Kong’s property market and into other markets like Japan, which has been happening 
already, Tung said.