Home » Business » Real Estate
HK moves against asset bubble
By Lee Chyen Yee and Alison Leung |
August 14, 2010, Saturday
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Print Edition
Print Edition
THE Hong Kong government tightened mortgage lending yesterday for bigger flats as their prices head for historic highs, fueling asset bubbles in the city.
Hong Kong, home to property tycoons such as Li Ka-shing and Lee Shau-kee, faces overheating in its real estate sector, driven by record-low interest rates, abundant liquidity partly due to Chinese mainland's buying and Asia's strong economy.
"We need to take preventive measures before an asset bubble forms," Hong Kong Financial Secretary John Tsang said at a press conference after the government announced economic data. "Experience indicates when the property market heats up, a lot of speculation takes place in the market. I will not hesitate to introduce further measures if necessary."
At a separate news conference, the Hong Kong Monetary Authority announced tighter rules for lending, lowering the mortgage loan ceiling to 60 percent from 70 percent for properties with transaction prices of HK$12 million (US$1.5 million) or above.
Previously, mass market apartments usually had a higher loan ceiling of 70 percent, while luxury apartments were categorized as those that cost HK$20 million or more.
The government will also raise the forfeit of deposits for buyers who cancel apartment transactions to 10 percent, from 5 percent, to discourage speculators.
"This is quite a powerful move to clamp down on speculation in the property market," said Alva To, head of consulting for north Asia at property services firm DTZ.
The latest moves will likely dampen sentiment in the stock market next week, analysts suggested.
Hong Kong, home to property tycoons such as Li Ka-shing and Lee Shau-kee, faces overheating in its real estate sector, driven by record-low interest rates, abundant liquidity partly due to Chinese mainland's buying and Asia's strong economy.
"We need to take preventive measures before an asset bubble forms," Hong Kong Financial Secretary John Tsang said at a press conference after the government announced economic data. "Experience indicates when the property market heats up, a lot of speculation takes place in the market. I will not hesitate to introduce further measures if necessary."
At a separate news conference, the Hong Kong Monetary Authority announced tighter rules for lending, lowering the mortgage loan ceiling to 60 percent from 70 percent for properties with transaction prices of HK$12 million (US$1.5 million) or above.
Previously, mass market apartments usually had a higher loan ceiling of 70 percent, while luxury apartments were categorized as those that cost HK$20 million or more.
The government will also raise the forfeit of deposits for buyers who cancel apartment transactions to 10 percent, from 5 percent, to discourage speculators.
"This is quite a powerful move to clamp down on speculation in the property market," said Alva To, head of consulting for north Asia at property services firm DTZ.
The latest moves will likely dampen sentiment in the stock market next week, analysts suggested.
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