World’s most expensive housing market just got even pricier with mortgages in HK eating up 70 per cent of monthly income

04-Jun-2019 Intellasia | South China Morning Post | 6:00 AM Print This Post

Ordinary people are increasingly being priced out of Hong Kong’s property market, with mortgages eating up almost 70 per cent of monthly incomes and prices surpassing the peak levels of the 1997 housing boom, the city’s finance chief said on Monday.

Financial Secretary Paul Chan Mo-po warned that home ownership was becoming unaffordable, with the cost of buying 1.26 times higher than 22 years ago.

That was a period marked by record transactions, high prices and long queues at new residential projects, before the city was hit by the Asian Financial Crisis.

Overall prices increased every month between January and April, and were up 9 per cent on last December.

Despite that, there were 5,400 transactions on average per month over that period, a sharp increase of 82 per cent from the fourth quarter of last year.

“Property prices are still mostly out of reach for Hongkongers,” Chan said.

His stark warning came during a Legislative Council panel on financial affairs, and against the simmering backdrop of an escalating US-China trade war.

However, the city’s finance chief moved to reassure businesses that the risks of the tariff spat were manageable, and said the government would look at ways to support the industries hardest hit by the conflict, including retail, tourism and exports.

“Owing to a lower market expectation of the US Federal Reserve raising interest rates, and fewer worries of the US-China trade war escalating back in the first quarter, the property market in Hong Kong has recorded a bounce since January,” Chan said.

He said mortgages continued to chew up the lion’s share of people’s pay packets, with 69 per cent of monthly incomes going on mortgage payments in the first quarter. The figure climbed as high as 93 per cent in 1997.

He said on average 18,800 private flats would be completed annually over the next five years, 20 per cent more than the figure for the previous five years.

“The government will monitor the property market closely to ensure its healthy development,” he said.

The trade war has also exerted downward pressure on the city’s economic performance, slowing Hong Kong’s growth in the first quarter to a meagre 0.6 per cent, a drop from the 1.2 per cent in the final quarter of 2018.

Chan said the city’s small and fully open economy was particularly exposed to global shifts caused by the ongoing dispute between Beijing and Washington, uncertainty over Britain’s planned exit from the European Union, and other geopolitical risks.

“The government believes the risks generated by the trade war are manageable, and we are studying proposals to support industries worst affected by the trade war,” he said.


Category: Hong Kong

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