HK property faces ‘great corrective pressure’

Hong Kong’s property market faces great corrective pressure amid threats from the euro zone crisis and macroeconomic volatility, causing uncertainty for home buyers, Financial Secretary John Tsang said on Monday.

Mainland China has seen the world’s fastest-growing prices over the last five years, up 111 per cent through the end of last year, with Hong Kong in second place at 94 per cent, according to property consultancy Knight Frank.

There was a lull in the Hong Kong market in the second half of last year, but confidence returned early in 2012 only to fall again the last few weeks. Prices have risen around 10 per cent so far this year.

“The local property market will face great corrective pressure,” Mr Tsang told legislators, adding that the deepening crisis in Europe caused sentiment to turn markedly cooler in May.

“These developments are a reminder to us that we cannot numbly believe the myth that property market will continue to rise and not fall.”

The governments in both Hong Kong and China are still talking tough on keeping the world’s fastest-rising property prices in check. Famously free market Hong Kong, though, is one of the first places to see hot money inflows into property, which can reverse just as rapidly during economic crises.

Source : Today – 5 Jun 2012

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