Hong Kong's finance chief said Friday risks for property buyers in the territory were "higher now than ever" as he announced new measures to tame the world's least affordable real estate prices. Financial Secretary John Tsang said the government of the quasi-autonomous city was working to control ever-rising prices amid growing disquiet among the seven million-strong population over the rocketing cost of owning a home.
"This situation is rather unusual - the property market trend is hard to predict," he said. "I urge citizens to think twice before entering the property market, as the risk is higher now than ever. "The current market situation requires us to boost efforts in two respects. One is increasing land supply, the second is strengthening risk management in bank systems," he said.
The southern Chinese city has imposed new taxes and staged a series of land auctions in the past year-and-a-half to boost supply and bring down prices. Despite the earlier measures, some existing properties are still fetching top-end prices with the home of France's top diplomat selling last month for a whopping HK$580 million.
A study by US consultancy Demographia in January found Hong Kong's home prices were the least affordable in the world. The Hong Kong Monetary Authority on Friday told lenders to limit mortgages on properties worth more than HK$10 million to half their value, a cap which previously applied only from HK$12 million. A 60 percent maximum loan-to-value ratio was imposed on properties worth HK$7-10 million, down from HK$8-12 million. Norman Chan, chief executive of the authority, said the changes were made to "make the banking system more resilient and robust".
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