Hong Kong homebuyers warned 'don't rush into the market - it's heating up'

The city's finance chief has warned prospective homebuyers to be aware of the market risks amid signs the lower end of the housing market is picking up.

Financial Secretary John Tsang Chun-wah said there were indications the market was "heating up", especially for low-cost homes - those in the region of HK$4 million. He was worried about buyers rushing in without considering long-term affordability and a potential rise in interest rates.

"I am particularly concerned about the buyers in this [low-cost] market," Tsang wrote in his weekly blog posting yesterday. "Once [the trend] in the property market starts to reverse, the ability of buyers to withstand [the impact] is generally quite weak."

Tsang urged homebuyers to keep an eye on prices and interest rates - and consider their own ability to buy - before they made the decision to enter the market.

His remarks came just days after lawmakers passed a bill to double the stamp duty on property purchases of HK$2 million or more, up to a ceiling of 8.5 per cent. Buyers have been paying the duty since February last year.

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Midland Holdings managing director Pierre Wong Tsz-wa said government cooling measures had raised transaction costs and the supply of low-cost homes had halved recently.