Interest rate hikes in the United States, which most observers expect to begin sometime next year, will have a big impact on the Hong Kong property market, said Norman Chan, chief executive of the Hong Kong Monetary Authority (HKMA).
But he said the problem of negative equity will not be as serious as that seen when the property bubble burst between 1998 and 2003, Chan said, attributing it to the current higher down-payment ratio for mid- and low-priced properties.
Residents are also more prepared for the interest rate hike than they were in the 1990s, he said, according to RTHK.
Chan also said in a legislative council meeting that the property market has experienced nearly a year of relief period after the government introduced demand-side management measures following six rounds of counter-cyclical measures since February last year.
Property prices have dropped slightly overall but transactions have become more active since March.
Chan said it is not clear whether the property market will heat up again, but stressed that the HKMA will continue to introduce counter-cyclical measures if prices climb continuously. And if the authority is certain that a downward cycle is formed, it will relax the tightened measures rolled out before.
Meanwhile, several lawmakers have expressed concerns about the potential impact of the ongoing Occupy street protests on Hong Kong’s broader economy and financial markets.
They are worried that the divide in the society, the worsening relationship between the executive and legislative bodies and the difficult political situation will affect Hong Kong’s role in the global financial sector and the local credit rating.
Responding to these concerns, Chan said he cannot define what exactly would constitute a “difficult political situation”, and added that he will not personally comment on political issues.
But he stressed that it will be difficult to maintain a proper business environment and the city’s competitiveness without rule of law.
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