- The Lobby
- Extra Times
Hong Kong debt adds to home risks
Hong Kong monetary chief Norman Chan said more measures are possible to cool the city’s housing market as elevated household debt adds to risks from property-price gains over the past four years.
Debt is “near historic high levels,” Chan, the chief executive of the Hong Kong Monetary Authority, told lawmakers yesterday, citing ratios of 58 percent to 59 percent of gross domestic product in the third and fourth quarters. In a housing and economic downturn, repayment may become more difficult, the official said.
Chan told reporters that the HKMA can roll out a sixth package of measures if necessary to rein in the property market after already using tools such as limits on mortgage terms. In October, the government added a tax on foreigners’ home purchases. Overheating in the housing market is the biggest risk to financial stability, Chan said, echoing a warning in December from the International Monetary Fund.
“If one believes that the housing market and the economy go in cycles,” household debt levels may rise further when a downturn comes, Chan said. That’s because “the economy will become more difficult and personal and household income will be negatively affected,” he said.
Household debt in Hong Kong almost doubled to HK$1.21 trillion (USD156 billion) last year from HK$662.8 billion in 1997, when the housing bubble in the city burst, according to the HKMA. Mortgage loans of households jumped 64 percent to HK$888.9 billion during the period, while credit card and personal loans increased almost three-fold to HK$320.1 billion, the data show.
Home prices have doubled since the start of 2009, according to a weekly index compiled by Centaline Property Agency Ltd.
The IMF said that the property sector was the main source of domestic economic risk. At the same time, the odds of a slump that has major economic and financial consequences is “fairly low in the near term,” the fund said in December.
Chan repeated previous warnings that households used to low interest rates may be caught out when borrowing costs climb.
Responsible Right of Expression — In the interest of freedom of expression, coupled with a true sense of responsibility to encourage community dialogue, the Macau Daily Times offers its readers the opportunity to express their opinions on new-related matters through this website. All opinions are welcome. However, we reserve the right to remove comments that are deemed to be obscene, or are merely insults written under the cloak of anonymity. MDT
- UK steps up efforts to explore business opportunities in Macau
- German master chef shows how to make multi-layered cake
- Venues needed as local skating community grows
- MSAR to rent or buy land in Zhongshan city
- USJ invests in business administration courses
- Local students step out of their “comfort zones”
- New bilingual weekly newspaper to be published in Macau
- BRIEFS: Sin Fong proprietors threaten to sleep outside building
- MACAU - Scholar criticizes gov’t tourism management
- ART: Homegrown designers create posters to promote local culture
- City’s oldest Chinese theater renovation to finish in 2015
- Chamber of Commerce visits Francis Tam
- JUSTICE: Court rejects lawsuit against Health Bureau
- Macau “in a unique position to design a social welfare system”
- Rotary donation day calls for rare blood donors