New World Development's (HKG:0017) decision to defer coupon payments on four senior perpetual bonds has raised investor concerns and signals potential wider concerns for Hong Kong's property market, S&P Global Ratings said in a Wednesday release.

The move could erode homebuyer confidence and delay purchases, according to the rating agency.

As a result, S&P flagged a downside scenario where Hong Kong home prices dropped between 5% and 7% this year, contrasting with its earlier view of flat prices.

The rating agency expects rising polarization in funding access for Hong Kong developers, with banks likely to favor higher-quality companies.

Meanwhile, developers with weak liquidity may resort to pledging assets for financing, increasing subordination risks for unsecured bondholders.