Hong Kong homes overvalued, says IMF
May 14, 2018 - Hong Kong
The International Monetary Fund (IMF) said homes in Hong Kong are overvalued, but ruled out a crash in prices despite expected hikes in interest rates, saying demand remains high and supply limited.
The IMF's resident representative in Hong Kong, Sally Chen said yesterday that "we have warned repeatedly on the possibility of higher interest rates dampening the household balance sheet through the wealth effect", RTHK reported.
Home prices in the city have zoomed up to record levels over the last few months and US interest rate rises have prompted warnings from experts, including the Financial Secretary and Monetary Authority head, on the impact of higher mortgage conditions on the housing market.
But Chen said a price bust is only a remote possibility. "There is essentially a structural imbalance between supply and demand," she said, adding that the IMF is keeping a close eye on how rising interest rates will affect the SAR's property market.
She was speaking at the release of the IMF's assessment on regional economic outlook, which forecasts the city's GDP growth rate to be at 3.6 percent this year. Its growth forecast for the mainland is 6.6 percent for the same period.
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