Finance minister Paul Chan urges caution from Hong Kong homebuyers
Paul Chan calls for ‘extra attention to all kinds of risks’ when considering buying a home in the city, amid US rate rise and uncertain global outlook
Financial Secretary Paul Chan Mo-po on Sunday urged homebuyers to be cautious, warning that the impact of further US interest rate rises could curb Hong Kong’s soaring property prices.
The warning, in Chan’s weekly blog, came a day after it emerged that a family snapped up 11 flats at Sun Hung Kai Properties’ (SHKP) Cullinan West development for HK$230.4 million on Saturday, reflecting the red-hot state of the market.
That followed last week’s decision by the US Federal Reserve to increase its benchmark interest rate by 25 basis points, as expected, which would result in higher borrowing costs for Hong Kong homebuyers due to the fixed exchange rate system.
“I completely understand that, for many Hongkongers, buying a house is the most important lifetime investment decision,” the finance minister wrote.
“But the basic market conditions have fundamentally changed, and homebuyers should pay extra attention to all kinds of risks before any decision is made.”
The risk factors include increased supply of new homes in the coming years, higher interest rates and a volatile global economy in the aftermath of Britain’s vote to leave the European Union and Donald Trump becoming US president.
Chan said it was worrisome that house prices were still growing despite government cooling measures, such as the new stamp duty.
“I really don’t see any condition or room for the government to scrap the cooling measures,” he wrote.
But Chan said he expected the latest round of US interest rate increases to put a brake on Hong Kong’s soaring home prices.
He said the common perception that “property prices only rise in Hong Kong” was simply not true, as prices actually increased at a slower rate or even fell during the previous rounds of the Federal Reserve’s rate adjustments.
Regardless of such warnings, developers netted about HK$10 billion from the sale of more than 900 new flats over the weekend.
After the strong performance, SHKP raised the price of its next batch of 105 units at Cullinan West, atop the MTR Corporation’s Nam Cheong station, by 3 to 4 per cent from its previous batch to HK$21,865 per sq ft after discounts.
“We made a slight increase in prices mainly because of different floors and better views,” Victor Lui Ting, deputy managing director at SHKP, said. “Hong Kong housing demand remains strong due to economic stability and rising salaries. Home prices will increase modestly this year.”
Alan Chan, general manager for sales and marketing at SHKP, noted that one buyer had acquired three four-bedroom flats for about HK$96 million.
Wheelock Properties will release an extra 168 flats at Monterey in Tseung Kwan O, charging up to 3 per cent more than before, at HK$15,631 per sq ft.
Cheung Kong Property Holdings will release another 56 flats at Seanorama at an average of HK$15,041 per sq ft, 2 per cent higher than the previous sale.