There's nothing surprising in the US Federal Reserve's statement that is widely taken to mean that borrowing costs will be raised at next month's meeting of the rate-setting committee.

The projected increase, however, is expected to be too mild to force Hong Kong taking immediate action to lift rates in defense of the currency peg.

The longer-term trend of rising borrowing costs does not bode well for the red hot property market. But, the severity of any homes price adjustment is likely to be mitigated by the inflow of overseas capital from investors in various regional economies parking their money in assets denominated in the strong Hong Kong dollar.

Hong Kong investors, meanwhile, have plenty of other domestic problems to worry about. The question that's weighing heavily on their minds is whether the asset, especially the property price boom, can be sustained in a weakening economy.

A recent survey showed that average inflation-adjusted wages have not gone up for decades, while personal wealth is generated mainly by investing in appreciating assets, including properties and stocks.

The already tepid economic performance, which is expected to worsen next year, could pile pressure on wages, especially in the retail sector - one of the city's largest employers. The prospects for other labor-intensive sectors, such as tourism and catering, look equally gloomy.

Despite the government's efforts to increase the supply of land for development, average homes prices have continued to surge to levels fewer and fewer people can afford. Mortgage loan repayments already take up almost half of an average household's total income.

Property developers are downsizing units in their new developments to make them affordable for more prospective buyers. In some of these so-called "nano" flats, the toilet shares the same space with the kitchen.

If that's not depressing enough, look at the latest Nikkei PMI (purchasing managers index) for October. At 48.2, it has slipped below the contraction mark for 20 successive months. Nikkei said October recorded the highest job losses in six months, while many private-sector enterprises are cutting costs amid a deteriorating business climate.

An interest-rate increase isn't that much of an issue when there's little demand for loans.

(HK Edition 11/04/2016 page9)