Hong Kong's property curbs likely to stay until prices fall further
Increased supply and rising interest rates could see prices fall by 20 per cent, but until this happens the cooling measures will likely stay in place
Pleas by real estate agents for the Hong Kong government to relax its measures aimed at cooling down the property market are likely to fall on deaf ears until prices have fallen further, say analysts.
"We are only likely to see some relaxation in the measures once home prices have fallen by 15 to 20 per cent - and even then the administration will be careful about which measures it will relax," said Andrew Lawrence, managing director of equities research for real estate at Malaysia-based investment bank CIMB Securities.
Echoing these views, Bocom International property analyst Alfred Lau said increased housing supply and rising interest rates could combine to bring house prices down by as much 20 per cent over the next three or four years, and until this happened the cooling measures were likely to remain in place.
Interest rates were likely to begin rising next year and new supply would come on stream in 2016 and 2017, said Lau. Every one percentage point rise in mortgage rates could translate into a fall in home prices of up to 6 per cent, he added, and mortgage rates could more than double from their present 2.2 per cent to 5 per cent.
"The government will not lift the measures until this correction gets under way," said Lau.
Chief executive Leung Chun-ying said on Sunday he understood the curbs had affected the business of property agents and other home services, but defended the measures because, he said, they had been effective in cooling down the red-hot market.
On August 5, Leung wrote in his blog that the government would neither relax nor withdraw its property-cooling measures as hot cash remained abundant in the global market.
