Hong Kong finance chief warns on property prices

HONG KONG: Hong Kong's finance chief warned Sunday that the government may take further measures to curb rising property prices if necessary, local radio said.

Financial Secretary John Tsang said he was very concerned with the risk of an asset bubble forming, since property prices have surged past the record levels seen in 1997 prior to the Asian financial crisis, RTHK reported.

Tsang said the government would not hesitate to introduce further measures to stabilise the market if necessary.

Writing in his blog (www.fso.gov.hk/chi/blog/blog190611.htm), Tsang said market risks continued to heighten and described the current situation of a strong economy, high liquidity and an ultra-low interest rate as "abnormally prosperous," RTHK said.

Hong Kong has seen property prices surge over the past couple of years due to record low interest rates and a flood of wealthy buyers from mainland China.

Earlier this month Tsang said 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 -- increasing land supply and strengthening risk management in the banking system.

The government has been trying to control ever-rising prices amid growing disquiet among the seven million-strong population over the rocketing cost of owning a home.

Some lawmakers have called for the resumption of a subsidised housing scheme because of concerns about the city's growing income gap.

The Hong Kong Monetary Authority earlier this month told lenders to limit mortgages on properties worth more than HK$10 million ($1.3 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.

The southern Chinese city has also 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.

Copyright AFP (Agence France-Presse), 2011