Hong Kong Chief Executive Donald Tsang has announced that the city-state will take administrative and legislative action against speculative activity within the housing market.
Asian markets are drawing “huge amounts” of liability, which increases inflationary pressure on their asset and consumer prices, said Mr. Tsang.
His comments came a week after Hong Kong Monetary Authority (HKMA) Chief Executive Norman Chan said the city faces an intensified risk of an “asset bubble”.
Increased land supply, the raising of stamp duties on some luxury properties and higher down-payment requirements have not dampened housing prices that have increased more than twice from a trough in 2003 on a recovering economy, an influx of buyers from mainland China and interest rates at a two-decade low.
“I don’t think they are going to issue any drastic measures,” said David Ji, head of Greater China research at DTZ Holdings Plc in Hong Kong. “What they can do is maybe raise mortgage rates and increase land supply. Speculation in Hong Kong mostly is concentrated in the luxury sector and it’s a lack of supply.”
Mr. Tsang refused to give details of any measures to control speculation in the housing market or the timing.
“The measures must remain secret until they are released, otherwise they become ineffective,” said Mr. Tsang. “I’m not discouraging the healthy movement of the property market. As the market grows here, definitely property prices will grow gradually, along with the economy. But if it’s moving out of kilter with the economy then something must be done, particularly if that growth is generated by speculative activities.”