New moves to rein in HK home prices

The Kowloon district from the viewing deck of the International Commerce Centre (ICC) in Hong Kong.
The Kowloon district from the viewing deck of the International Commerce Centre (ICC) in Hong Kong. PHOTO: AFP

HONG KONG • Hong Kong regulators announced new prudential lending measures yesterday to cool a red-hot property market, moving for the second time in six months to discourage buyers from pushing up residential prices that are already at record highs.

Hong Kong's real estate is among the most expensive in the world and latest government data showed property prices in March surpassed a peak hit in September 2015 amid increasing volumes.

The surge has come as mainland Chinese companies are increasingly making their presence felt in Hong Kong's primary market while mainland buyers form an increasing proportion of the secondary residential market.

Skyrocketing property prices have added to growing discontent in the city, with its population already under strain from high living costs and a widening wealth gap.

Mr Norman Chan, the head of Hong Kong's de facto central bank, the Hong Kong Monetary Authority (HKMA), said the fresh measures include raising the risk-weighted floor to 25 per cent for new mortgage loans, lowering the loan-to-value ratio by 10 percentage points, and trimming the debt servicing ratio.

The measures come after the government raised stamp duties on home purchases in November and the central bank raised interest rates twice since December following the US Federal Reserve's actions. But they have failed to dampen a buoyant property market.

The HKMA said all the new measures take effect immediately.

Market watchers believe the new measures will not trigger a correction in prices as the majority of overseas buyers tend to be cashed-up mainland buyers. They say more measures are likely in the coming months.


A version of this article appeared in the print edition of The Straits Times on May 20, 2017, with the headline 'New moves to rein in HK home prices'. Print Edition | Subscribe