Date
27 May 2017
Hong Kong could bring down the down-payment requirements if home prices fall another 10%, according to an analyst. Photo: Bloomberg
Hong Kong could bring down the down-payment requirements if home prices fall another 10%, according to an analyst. Photo: Bloomberg

HK seen easing down-payment rules if home prices fall further

The Hong Kong Monetary Authority (HKMA) might ease restrictions on down-payments for home buyers this year if prices continue to decline, according to an analyst with Bank of America Corp.

“It’s likely to happen,” Bloomberg News quoted Raymond Ngai, head of Greater China property research at BofA’s Merrill Lynch unit, as saying Tuesday.

“Prices have fallen 8 percent since September and with another 5 to 10 percent drop you may see the HKMA relax restrictions,” Ngai said at a media briefing, according to the report.

That would signal an unwinding of macro-prudential measures on loan-to-value ratios that the monetary authority started implementing in 2009, the report noted.

In February last year, the HKMA raised the minimum down-payment on properties valued at less than HK$7 million (US$900,000) to 40 percent from 30 percent.

It also required buyers of homes worth more than HK$10 million to put down 50 percent, against 40 percent previously.

“I don’t think we need to pay a 40 or 50 percent down-payment if prices correct 10 or 15 percent,” said Ngai, predicting that down-payment requirements could fall to the 30 to 40 percent band.

Some analysts have warned that Hong Kong home prices could fall as much as 30 percent this year due to increased supply and an expected rise in short-term interest rates.

– Contact us at [email protected]

RA/RC

EJI Weekly Newsletter

Please click here to unsubscribe