Hong Kong’s property sector is facing multifaceted risks that make it difficult to predict the market’s outlook, Secretary for Financial Services and the Treasury Ceajer Chan Ka-keung said.
The risks stem from the current high level of property prices, the slowing economy, a mismatch between demand and supply, and the long-anticipated US interest rate hike, Chan told the Hong Kong Economic Journal in an interview.
It is difficult to estimate the potential decline in property prices, Chan said, adding that it is possible the city would see the return of negative equity in the market.
However, counter-cyclical measures imposed by the Hong Kong Monetary Authority over the past three years have limited homebuyers’ ability to fund their purchases with loans, thus helping ward off the return of negative equity, he said.
The government is also closely monitoring the impact of China’s sluggish growth on the local economy and capital flow in the region, given Hong Kong’s highly extrovert economy, Chan added.
The HKMA has injected HK$155.6 billion into the banking system over the past two months to prevent the currency’s dollar peg from breaching the strong end.
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