Nov. 4 (Bloomberg) -- Hong Kong’s government is “very concerned” about the “sharp” rise in property prices, Financial Secretary John Tsang said, adding to comments from senior officials worried about a real estate bubble.

“If necessary, we will fine-tune the land supply arrangements,” Tsang said in a statement on the government’s Web site today. “The government understands the ramifications our policy decisions will have on the operation of the property market, and we will act prudently.”

Hong Kong Chief Executive Donald Tsang said on Nov. 2 his government is “closely” monitoring the property market after home prices jumped 28 percent from the start of the year through October. The government has raised down payments for luxury apartments, suspended mortgage insurance for rental properties and said it may intervene if the market becomes “unhealthy.”

Financial Secretary Tsang told developers at a closed-door meeting on Oct. 27 that the government doesn’t rule out intervening in the property market should it become “unfair,” a person familiar with the matter said.

Two days later, Tsang told legislators he was “concerned” about “recent sales tactics and transacted prices” in the primary home market.

The Hang Seng Property Index, which tracks six real-estate companies, has surged 63 percent this year, outpacing the 50 percent gain for the benchmark Hang Seng Index.

Developers “hope that the government will increase the opportunities for selling land via applications,” Stewart Leung, an executive director at New World Development Ltd., told reporters in Hong Kong last week.

The city’s government has adjusted supply to deal with changes in the property market. In November 2002, it suspended scheduled land sales as home prices continued to fall following the 1997-98 Asian financial crisis, the 2000 bursting of the dot-com bubble and the Sept. 11, 2001, terrorist attacks.

To contact the reporter on this story: Kelvin Wong in Hong Kong at kwong40@bloomberg.net

Last Updated: November 4, 2009 04:22 EST