Hong Kong’s Financial Secretary John Tsang Chun-wah said on Monday that the property bubble risk cannot be overlooked although the market has cooled down a bit recently.
Currently, property prices are still 40 percent above the peak level in 1997, and the local debt-to-income ratio has stayed at 56 percent in the first quarter of this year, RTHK cited Tsang as saying. Should the key interest rate rise to 3 percent, the ratio could increase to 73 percent, he said.
“We need various measures to tackle land and home supply issues, Tsang said, adding that the government will maintain the existing property policies given the market uncertainties.
The additional stamp duty introduced in February 2013 has helped rein in property prices in the city and reduce market transactions.
However, as the US is likely to wrap up its quantitative easing, or the so-called QE, as early as next year, global capital flow changes will affect local property prices, Tsang was quoted saying.
“The government will watch closely how the US Fed moves,” he said. Hong Kong will be able to deal with any large inflow and outflow of capital, given the city’s sound economic conditions, the official said.
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