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Flat buyers in for a rude awakening, Hong Kong officials warn
If interest rates return to ‘normal level’, homeowners would face mortgage payments that eat up 86pc of their income
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Hong Kong’s top financial officials on Monday issued their strongest warning yet to homebuyers about escalating risks in the “exuberant” market, revealing that prices were now nearly 90 per cent above their peak in 1997.
Principal government economist Helen Chan told a Legislative Council meeting that if currently low interest rates went back to a “normal level” – which would mean a 3 per cent rise – home owners would have to set aside 86 per cent of their monthly income for mortgage payments.
Financial Secretary Paul Chan Mo-po, warning that the chance of a US interest rate rise this month was 100 per cent, noted that mortgage payments were already taking up 66 per cent of home owners’ income and the ratio could increase further.
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Chan revealed that property prices in the city surged 6.5 per cent in the first four months of this year, with a 2 per cent increase in April alone.
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“The risk in the property market is very high; sentiment in the property market is very exuberant,” Chan said.
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