Property cooling measures to stay in place for now, Hong Kong housing chief Frank Chan says
- Despite 1.5 per cent price dip, government has not confirmed that market is in downward cycle
- Relaxing demand-side management measures could send wrong signal, causing market to heat up again, minister says
Property cooling measures will not be eased for now as the government has yet to confirm the market is in a downward cycle, Hong Kong’s housing chief said on Wednesday.
Prices dipped by only 1.5 per cent in the past two months, while they had climbed twofold over the past decade, Secretary for Transport and Housing Frank Chan Fan said.
“We are not yet able to confirm the market is in a downward cycle,” he told lawmakers at a Legislative Council meeting on Wednesday morning.
“At this moment it is not appropriate to relax any demand-side management measures … otherwise we would be sending a wrong signal to the market and seeing it heat up again.”
Chan was replying to a question raised by Business and Professionals Alliance vice-chairman Jeffrey Lam Kin-fung, who said the local property market might have entered a downward cycle because of a gradual rise in interest rates and worsening US-China trade conflicts.
The Monetary Authority’s loan-to-value ratios for mortgage loans would not be relaxed, and the four different stamp duties introduced over the past eight years would not be reduced at this stage, Chan said.
The authority and the financial secretary, monitoring the market with an internal mechanism, would make a decision on whether to change any of the cooling measures “in due course”, the housing minister added.
Financial Secretary Paul Chan Mo-po, meanwhile, gave the same message to the media at a separate occasion. Describing the recent market adjustments as “orderly”, he said there was no plan to alter the measures at the moment.
Billy Mak Sui-choi, of Baptist University, said there was no textbook definition as to how much prices should drop in order for the property market to qualify as being in a downward spiral.
Mak believed the government would not take action so soon, considering it did not ease the cooling off measures – most of which were already in place – in the last peak in 2015.
At that time, Centaline’s CCL Index dropped by more than 10 per cent over a period of eight months after hitting 146.9. The index, recorded at 180.4 last week, traces home prices in the secondary market every week.
Economist Andy Kwan Cheuk-chiu, director of the ACE Centre for Business and Economic Research, agreed that it was not yet time to undo the property cooling measures.
“The market is adjusting itself very slowly,” Kwan said. “If the market bounces back in case of an easement, who should be held responsible?”