The overheating property market remains the biggest risk factor to the stability of the Hong Kong economy, Mr Norman Chan, head of the Hong Kong Monetary Authority, said yesterday, adding that household debt was now at 59 per cent, close to the record high of 60 per cent in 2002.
Only three months after Hong Kong rolled out a tough new round of cooling measures, home prices have again climbed to record highs, with demand unusually strong for new flats over the normally quiet Chinese New Year holiday break.
Property prices now exceed HK$10,000 (S$1,600) per sq ft even in drab, unglamorous districts such as Taikoo Shing on Hong Kong Island, where thousands of 700 sq ft units sell for more than US$1 million (S$1.24 million) each, more than a large cottage in Provence, France, or a 1,300 sq ft flat on Manhattan’s Upper West Side.
Hong Kong officials have stressed repeatedly that reining in the city’s property market, now one of the world’s most expensive, is a policy priority.
After five rounds of measures to curb prices since October 2009, including a 15 per cent property tax on foreign buyers, mortgage restrictions and resale taxes, the home price juggernaut rolls on and the challenge remains enormous.
The Centa-City Leading Index, a widely used indicator of Hong Kong’s residential price trends, is now at a record 121.7, 5 per cent higher than in mid-January.
The coming annual budget presentation by Hong Kong’s Financial Secretary could see a fresh round of market curbs that would likely face opposition from the territory’s powerful Big Five developers.
Together these giants — Cheung Kong, Sun Hung Kai, Henderson Land Development, New World Development and Sino Land — control around 90 per cent of new property sales in Hong Kong.
With substantial land banks and a lack of competition, they have huge leverage over a government that is keen to encourage a swifter roll-out of new flats and which could offer incentives to convert and rezone land for residential use.
Source : Today – 22 Feb 2013