‘Dangerous Situation’ for Hong Kong Property Market, Says Finance Chief

Hong Kong’s skill marketplace is in a dangerous conditions and exposed to a correction, Financial Secretary Paul Chan pronounced in an interview.

The warning comes as rate hikes by a U.S. Federal Reserve send borrowing costs aloft in Hong Kong, given a city imports U.S. financial process due to a banking peg. The Hong Kong Monetary Authority final week increased borrowing costs by 25 basement points to 1.5 percent after a Fed lifted a aim operation by a same amount.

“That’s because we have to advise a people about a dangerous conditions of a skill marketplace during a moment,” Chan told Bloomberg Television in an interview.  

Chan, who was allocated financial secretary in January, pronounced he is endangered about a improvement in Hong Kong, a world’s priciest housing market. “No one can tell how low a composition will be or what is a suitable turn of adjustment.”

At a same time, Chan also talked adult a strength of Hong Kong’s financial system, that he pronounced can withstand any high correction. The supervision is already holding stairs to boost supply and palliate direct and a stream cycle isn’t display signs of a crash, he said.

The Asian financial predicament overwhelmed off a six-year skill bust in Hong Kong that shaved some-more than two-thirds off prices and saddled a city with a low economy and deflation.
Chan pronounced he doesn’t design that to be repeated. “The conditions is really opposite from 1997.”

Read more: Ghost of ’97 stalks economy putrescent by housing debt

Efforts by authorities to cold direct by tighter manners for lending and other measures have so distant had small impact on home prices in Hong Kong, as developers bid adult a cost of land to new annals and borrowing costs sojourn low. The value of superb mortgages jumped by some-more than a third in a 5 years by Dec and now amounts to 47 percent of sum domestic product, some-more than 10 commission points aloft than in early 1997 before a housing burble burst.

Predictions of a skill pile-up in Hong Kong have been proven wrong in new years as a city shook off crises, epidemics, an aging race and China’s slowdown. Its standing as a gateway to a world’s second-biggest economy, with Western-style authorised protections, means Hong Kong continues to attract investment.

Chan pronounced a former British colony’s purpose as a passage for collateral into and out of China stays a pivotal strength.

“We can be a risk manager for both sides,” Chan said.

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