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HK moves to cool home prices
Source: Bloomberg News |
01:10 UTC+8 June 11, 2011
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HONG Kong ordered home buyers to make bigger down payments and raised hurdles for overseas investors, widening a 20-month effort to cool surging home prices and avert defaults on bank loans.
Buyers of homes costing more than HK$6 million (US$770,000) will have to increase up-front payments, with properties of HK$10 million or more requiring 50 percent, Hong Kong Monetary Authority Chief Executive Norman Chan said yesterday. Foreign buyers must deposit an additional 10 percent.
The measures mark Hong Kong's fourth attempt since October 2009 to curb inflating values of residential properties, rated by Savills Plc as the world's most expensive. Home prices have surged as much as 70 percent since the beginning of 2009 on record-low mortgage rates, an influx of buyers from Chinese mainland and a lack of supply.
"The significant change is the new rule about foreign buyers since it's obviously targeting the mainland buyers," said Eva Lee, analyst at Macquarie Securities Ltd. "What it does is it may create a psychological impact on them: They may start expecting more measures."
The new rules are effective immediately, Chan said.
Borrowers whose income is primarily from outside Hong Kong will need to make a higher down payment unless they can demonstrate a "close connection" to the city such as evidence that they work for a local employer or that an immediate family member resides in Hong Kong, the HKMA said in a statement.
Home prices in Hong Kong gained 1.3 percent last week from the previous seven days, according to Centaline Property Agency Ltd, the city's biggest closely held realtor.
The HKMA had already taken steps to tighten mortgage-lending standards three times since October 2009. The government on November 19 raised stamp duties on homes sold within six months of purchase and set higher down payments for those costing HK$8 million or more.
Buyers of homes costing more than HK$6 million (US$770,000) will have to increase up-front payments, with properties of HK$10 million or more requiring 50 percent, Hong Kong Monetary Authority Chief Executive Norman Chan said yesterday. Foreign buyers must deposit an additional 10 percent.
The measures mark Hong Kong's fourth attempt since October 2009 to curb inflating values of residential properties, rated by Savills Plc as the world's most expensive. Home prices have surged as much as 70 percent since the beginning of 2009 on record-low mortgage rates, an influx of buyers from Chinese mainland and a lack of supply.
"The significant change is the new rule about foreign buyers since it's obviously targeting the mainland buyers," said Eva Lee, analyst at Macquarie Securities Ltd. "What it does is it may create a psychological impact on them: They may start expecting more measures."
The new rules are effective immediately, Chan said.
Borrowers whose income is primarily from outside Hong Kong will need to make a higher down payment unless they can demonstrate a "close connection" to the city such as evidence that they work for a local employer or that an immediate family member resides in Hong Kong, the HKMA said in a statement.
Home prices in Hong Kong gained 1.3 percent last week from the previous seven days, according to Centaline Property Agency Ltd, the city's biggest closely held realtor.
The HKMA had already taken steps to tighten mortgage-lending standards three times since October 2009. The government on November 19 raised stamp duties on homes sold within six months of purchase and set higher down payments for those costing HK$8 million or more.
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