Sunday, 1 March 2015

Further Dampening Measures Imposed by Hong Kong Government to try and control property market

The Hong Kong Government has taken additional steps in a renewed effort to dampen the Hong Kong Property market.

The news announced by the Hong Kong Monetary Association on Friday see changes to the the loan-to-value ratio for mortgages on residential properties costing less than HK$7 million is capped at 60 per cent, down from the previous range of 70 per cent.

Effective immediately, the measures are the seventh move since February 2013 intended to cool the soaring property prices, which have reached an all-time high amid inflows of capital and historically low interest rates.

Refer to our post http://www.qi-homes.com/en/blog/kong-kong-property-prices-rise-13-amid-new-bubble-fears

Some analysts questioned the longer-term impact of the measures.

"The impact of this will be very short-lived as interest rates are still very low and Hong Kong's inflation remains high relative to the region, which means effective real interest rates are still in negative territory," said Raymond Leung, an economist at ANZ in Hong Kong.

The HKMA also reduced the amount of debt that borrowers can service to 40 percent from 50 percent for all mortgage loans taken for non self-use properties. All measures will be effective immediately.
Property Prices surged about 130 percent since 2008 due to low interest rates, a supply shortage and ample liquidity.

The government have said they will monitor the property market closely and, if necessary, roll out other measures