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CN HK cooling measures here to stay

Property Here - Wednesday, August 21, 2013

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The Hong Kong government is unlikely to relax its market cooling measures unless property prices decline further, analysts said.

“We are only likely to see some relaxation in the measures once home prices have fallen by 15 to 20 percent - and even then the administration will be careful about which measures it will relax,” said Andrew Lawrence, Managing Director of Equities Research for Real Estate at CIMB Securities.

Another property analyst, Alfred Lau from Bocom International, noted that the combination of increased housing supply and rising interest rates could pull housing prices down by up to 20 percent in the next three or four years, but until that happens, the rules will remain in place.

Lau expects interest rates to rise next year, with new supply flooding the market in 2016 and 2017. Home prices will likely fall by up to six percent for every one percentage point increase in mortgage rates, he explained, adding that mortgage rates could rise from the current 2.2 percent to five percent.

“The government will not lift the measures until this correction gets under way,” he stated.

While HK Chief Executive Leung Chun-ying understands that the measures have affected property agents and other businesses such as home services, they have effectively cooled down the red hot property market.

Moreover, the government will neither relax nor withdraw the curbs given the abundance of hot cash in the global market, Leung added. 



Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories email romesh@allproperty.com.sg