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S&P says land prices to stay up

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Rating agency Standard & Poor's says Hong Kong property prices will remain high as demand still outstrips supply, but that it had no intention of altering the territory's credit rating as a result.

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The agency said it remained conservative when rating individual property companies and banks as they were particularly prone to any downturn in the property market.

S&P argued the wider economy was resilient enough to survive moderate downturn in the property market.

S&P's managing director in Hong Kong, Paul Coughlin, said demand for property would continue to be strong given the territory's rapid population growth and influx of Chinese-based companies and Chinese workers. Demographic changes such as a decrease in the size of average households and rising disposable income had spurred demand for houses.

He said the supply of residential properties in the private sector had been reduced in the past few years, exacerbating recent price escalation.

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'The topography of Hong Kong and the scarcity of prime, urban, developable land have contributed to the continuing imbalance in demand and supply,' he said.

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