Housing Prices Again Going Thro Roof

21 Feb 2013

Close on the heels of the report that Hong Kong has been dethroned as the place for most expensive office rents comes another that property prices were going through the roof once again. The Special Administrative Region had put curbs on property owners from buying more property for profit hardly 3 months ago in order to stabilize prices, but property prices were apparently more in the hands of the market forces than with official agencies.

Hong Kong officials have repeatedly stressed that reining in the city's property market is a policy priority to restore affordability and to mitigate a major threat to the economy of the affluent Asian financial hub.

After five rounds of efforts to curb prices since October 2009, including a 15% property tax on foreign buyers, mortgage restrictions and quick resale taxes, the home-price spiral rolls on and the challenge remains enormous.

"The overheating of the property market remains the biggest risk factor to the stability of the Hong Kong economy," said Norman Chan, head of the Hong Kong Monetary Authority, the city's de facto central bank. He said household debt was now at 59%, close to a record high of 60% in 2002.

Everyone here is aware of the havoc caused by housing mortgage deals in the US, but there is an element of helplessness in controlling the runaway prices. Property prices per square foot now exceed HK$10,000 ($1,300) even in drab districts such as Taikoo Shing on the Hong Kong Island. A 700 square-foot unit there sells for more than $1 million.