http://www.bloomberg.com/news/2011-06-06/hong-kong-banks-mortgage-rate-increases-take-steam-out-of-housing-boom.html
Andrew Lawrence, a Hong Kong-based analyst at Barclays Capital, is among those betting the property market in the city of 7 million people has peaked. Prices may decline 10 percent to 20 percent in 2012 and a further 10 percent in 2013 on rising mortgage rates, Lawrence said in an interview on Bloomberg Television today.
Hong Kong Chief Executive Donald Tsang faced a public outcry last year as government efforts to stem surging house prices had little effect. Prices have risen about 140 percent from the end of 2003 to end 2010, according to an index compiled by Centaline Property Agency Ltd., Hong Kong’s biggest closely held realtor. Average household incomes rose 20 percent in the same period, according to the statistics department.
While fewer people can afford to buy a place in the former British colony, the affordability ratio, a measure of mortgage installments relative to household incomes, remains well below the 90 percent reached in 1997 at the onset of the Asian financial crisis, said Buggle Lau, chief analyst at Midland Holdings Ltd., Hong Kong’s biggest publicly traded realtor. The ratio fell to as low as 15 percent in 2003, climbed to 25 percent in 2009 and now stands at 40 percent, said Lau.
“Compared to two years ago, there are a couple more unfavorable factors,” such as rising interest rates and increased land supply, said Lau. Still, homes are more affordable than when the market last peaked as incomes are rising, he said. “There’s a huge difference between now and what happened during the last crash in 1998.”
Andrew Lawrence, a Hong Kong-based analyst at Barclays Capital, is among those betting the property market in the city of 7 million people has peaked. Prices may decline 10 percent to 20 percent in 2012 and a further 10 percent in 2013 on rising mortgage rates, Lawrence said in an interview on Bloomberg Television today.
Less Affordable
Hong Kong Chief Executive Donald Tsang faced a public outcry last year as government efforts to stem surging house prices had little effect. Prices have risen about 140 percent from the end of 2003 to end 2010, according to an index compiled by Centaline Property Agency Ltd., Hong Kong’s biggest closely held realtor. Average household incomes rose 20 percent in the same period, according to the statistics department.
While fewer people can afford to buy a place in the former British colony, the affordability ratio, a measure of mortgage installments relative to household incomes, remains well below the 90 percent reached in 1997 at the onset of the Asian financial crisis, said Buggle Lau, chief analyst at Midland Holdings Ltd., Hong Kong’s biggest publicly traded realtor. The ratio fell to as low as 15 percent in 2003, climbed to 25 percent in 2009 and now stands at 40 percent, said Lau.
“Compared to two years ago, there are a couple more unfavorable factors,” such as rising interest rates and increased land supply, said Lau. Still, homes are more affordable than when the market last peaked as incomes are rising, he said. “There’s a huge difference between now and what happened during the last crash in 1998.”
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