Hong Kong Financial Secretary sees rising risk in housing market

The threat of a global economic slowdown is intensifying risks in Hong Kong’s home market and the government will monitor housing policies designed to curb prices, said Financial Secretary John Tsang.

“The deepening of the European debt crisis and stalling growth in the United States could affect Hong Kong’s economy and may bring turmoil to global financial markets,” Mr Tsang told lawmakers in Hong Kong yesterday.

“Local economic growth will fall amid the severe external environment and there are cooling signs in the property market,” the Financial Secretary said.

Morgan Stanley and Daiwa Capital Markets said Hong Kong may have fallen into a recession in the third quarter, after the economy shrank 0.5 per cent in the April-to-June period from the previous quarter.

The government has in the past year raised minimum downpayment requirements on some home mortgage loans and increased land sales in an effort to curb soaring prices fuelled by record low mortgage rates, a shortage of new apartment supply and an influx of buyers from other parts of China.

Banks in Hong Kong have raised mortgage rates five times since March.

Hong Kong’s Chief Executive Donald Tsang promised to provide more affordable homes and signalled greater government intervention in narrowing social inequity in his Oct 12 policy address, responding to a public outcry over the more-than-70-per-cent surge in home prices since early 2009.

Home transactions fell for a ninth consecutive month in September, while prices declined 3 per cent from June to August.

Source : Today – 27 Oct 2011

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