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. 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. '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. He warned Hong Kong's property had become some of the most expensive in the world and claimed the high cost of maintaining operations here might affect the territory's status as a major regional and corporate centre. An agency spokesman said even if high property prices remain over time and started to affect Hong Kong's economy negatively, the city's sovereign rating would not be seriously affected. The agency confirmed its policy to assign different ratings to Hong Kong and China after the handover. This put an end to years of speculation that Hong Kong might need to lower its rating to comply with the agency's policy that a city's rating should not be higher than that of its sovereign state. The agency spokesman said Hong Kong was the first city in the world to receive this treatment as a result of the 'one country, two systems' policy. Hong Kong is now rated A+ in long term foreign currency debt, three notches higher than that of China at BBB+.