Hong Kong Government Takes Steps To Prevent Housing Bubble
December 14, 2009 - Hong Kong
The Hong Kong Monetary Authority, the city's central bank, last month imposed tighter mortgage restrictions, which Hong Kong Chief Executive Donald Tsang said were to stave off a big property bubble following soaring prices this last year. [...]
The action taken by the HKMA was on October 23rd, and it cut the mortgage limit from 70 percent of the property's value to 60 percent, on property worth HK$20 million (US$2.6 million) or more.
For properties below that figure, the 70 percent ratio stayed in place but the HKMA capped the maximum loan amount at HK$12 million. [...]
Despite the global recession, prices of Hong Kong's mass-market residential property have leapt more than 20 percent in 2009, and luxury property prices have gained even more, jumping 40 percent.
This latter surge is the result of an excess in global liquidity, and a fresh influx of cash from mainland China where there has been a big increase in the number of wealthy Chinese.
Real estate agents have said that property transactions have fallen since the cut, but analysts have pointed out that because many mainland Chinese buyers of luxury property in the city buy with cash, mortgage measures may not do much to calm the luxury sector.
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