(Bloomberg) -- Goldman Sachs Group Inc. has raised its forecasts for Hong Kong home prices, citing the border’s reopening along with an improving economic outlook and equity market recovery. 

Prices will fall 10% this year before rising 4% in each of the next two years, according to a report written by analysts including Gurpreet Singh Sahi dated Wednesday. They had previously projected values would drop 15% in 2023 and remain flat in 2024 and 2025. 

The city still has relatively weaker demand for homes compared to supply, the report says. While the opening of the Hong Kong-mainland China border could introduce additional demand, “the benefits would be slow to accrue as prohibitive stamp duties remain in place and mortgage rates are still rising over the next three to six months,” the analysts wrote in the note.

Hong Kong’s real estate industry has been under pressure stemming from rising interest rates and a population outflow. Resale home values declined about 16% last year, according to Centaline Property Agency. Eased border controls with the mainland and the removal of most Covid-related restrictions have boosted optimism in the market in recent weeks.

--With assistance from John Cheng.

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