THE rush to buy property by young Hong Kong families is cutting into retail profits, according to John Lee, vice-chairman of the Association of Retailers and Tourism Services.
''I'm no economist,'' he said, ''but housing trends are affecting spending patterns. Young families are much more budget-oriented now.'' Mr Lee, who also runs Tom Lee Music, a chain of musical instrument retailers, said government incentives to buy homes meant that many families which had previously paid government-subsidised rents were now becoming first-time buyers and seeing a larger slice of disposable income disappearing into their mortgage.
''OK, so that's good news in the long term, but in the short term it is hitting spending, especially at the lower end of the income scale,'' he said.
Mr Lee said shopkeepers and restaurateurs were noticing that the market was changing and he expressed concern about the effects of any increase in interest rates.
US Federal Reserve chairman Alan Greenspan has already signalled that US rates are to go up but has not said when. Hong Kong's interest rates are likely to follow because of the peg between the US dollar and the Hong Kong currency.
Households can pay out as much as half their income in mortgage costs. Rules amended last week mean that Hongkong Bank mortgage holders with an income of less than $30,000 can take out a mortgage with a monthly repayment of 40 per cent of income, while those with incomes of more than $30,000 can pay 50 per cent.
