It is too early to relax property curbs, as the risks of an asset bubble linger, the government says.
The measures have achieved their purpose, but the curbs will stay in place, said Chan Ka-keung, the Secretary for Financial Services and the Treasury.
"It's still too early to make any changes because the risks of an asset bubble remain," Chan said. "The US is yet to confirm when it will end its monetary stimulus policy, which would depend on the economic and employment figures. This means the global markets face volatilities ahead and our investment markets are in for a roller-coaster ride.
"We are still in a low-interest-rate environment and many portfolio funds are sloshing about in the Asian and Hong Kong investment and property markets. This is why the government still needs to keep the property curbs in place."
The US Federal Reserve last week hinted at tapering its monetary stimulus, but Chan said he did not read Fed chairman Ben Bernanke's statement that way. Bernanke, Chan said, provided no clues on when the quantitative easing programme, known as QE3, would end. "If the economic and unemployment figures in the following months are bad, Bernanke may allow the QE to continue," Chan said.
In the three rounds of QE since the financial crisis in 2008, the US government has aggressively pumped cash into the economy and kept interest rates low as a way of encouraging investment and spending to boost the economy.
Chan said that while these programmes help the US economy, they have a negative side effect in places such as Hong Kong, as the excess funds unleashed by QEs end up as speculative money betting on stocks and property in other markets.
Coupled with the buying spree by mainlanders in the property market, local property prices have been pushed to record highs. That prompted the Hong Kong government to announce more than 30 policy measures since 2009 to cool the market, with the latest one in February, in which the stamp duty on residential and non-residential properties above HK$2 million was doubled. That came after the introduction in October of a 15 per cent special stamp duty for non-local and corporate buyers.
"The measures we introduced in October were aimed at reducing overseas investors' interest in the Hong Kong property market while the February curbs were aimed at increasing the transaction cost for Hong Kong buyers to make them think twice before buying property. We have seen the transaction numbers drop over the past few months and have achieved our goal," Chan said.
A study by Ricacorp Properties found that 132 second-hand flats were sold in the 50 housing estates it monitors in the week starting June 17, a drop of 44 per cent from the previous week.
Chan said: "As the QE remains in place and the markets still face lots of ups and downs, we don't have sufficient evidence to justify a change in our policies."
In view of the volatility ahead, Chan said, the government would continue to encourage retail investors to buy low-risk bond products. To this end, the government has issued HK$30 billion of inflation-linked bonds in three years.
"We will continue to issue government retail bonds, but they need not be iBonds," Chan said. "The iBond was introduced three years ago for investors to hedge inflation risks. Back then, there were concerns about inflation rates rising in light of the QE programme. But now inflation has declined and we have to review the market condition to see what will be the most suitable products to launch."
Chan also said there would be a consultation paper this year on ways to bring down Mandatory Provident Fund fees, including simplifying administration procedures and providing more low-cost products.
The MPF, a compulsory retirement scheme in the city that covers 2.4 million employees, has been under fire for its high fees and sub-par performance.