Property bubble in HK, warns HSBC

A property bubble could emerge in Hong Kong if home prices continue to increase, said Peter Wong, chief executive of HSBC for the Asia Pacific region, who spoke to Bloomberg.

Home prices have soared 42 percent since the start of 2009, while the government is attempting to cool things down amid concerns that ordinary people can no longer afford housing.

“Property prices are at a fairly high level right now. If it continues to increase, it may form a bubble,” said Wong in an interview with Bloomberg Television. HSBC, which holds the biggest share of new mortgages among banks in Hong Kong since May, is “quite secured” with a 40 percent loan-to-value ratio in the city, he added.

Hong Kong prices have already increased 10.5 percent in 2010, said Centaline Property Agency. Meanwhile, Jones Lang LaSalle (JLL) said prices may increase another 10 percent by the end of the year, if the economy keeps booming and interest rates stay at their current low levels.