Hong Kong Financial Secretary John Tsang said he’s boosting land supply as part of a policy to reassure people that the housing market can grow in a more “healthy” way.
“This year alone I have come up two or three times with different policies, different initiatives, to reassure that we grow in a stable, healthy manner including increasing the supply of land,” Tsang said today at an event at the London School of Economics in London. “I hope that will help the housing market grow in a more healthy way.”
Risks in Hong Kong’s property market may exceed those in 1997 if falling prices coincide with rising interest rates, Hong Kong Monetary Authority Chief Executive Officer Norman Chan said last month. Mortgage rates there are at about a 20-year low as the city’s interest rates normally follow those in the U.S. because the currency is pegged to the dollar.
“We recognize the close-to-zero interest rate and the ample liquidity of that is affecting people’s desire in terms of demand for housing in Hong Kong,” Tsang said. “Unfortunately in the last few years the supply has been low.”
Hong Kong’s economy expanded a more-than-estimated 6.5 percent in the second quarter from a year earlier, prompting the government to raise its 2010 growth forecast in August to as much as 6 percent, from the previous 4 percent to 5 percent.
Tsang said today that the economy is “back on its feet” and the finance industry is in “resilient” shape.
“We are forecasting robust GDP growth for this year,” he said. “I would not be surprised if it was above 6 percent.”
Tsang also stressed the role that Hong Kong has to play in the evolution of the yuan as a globally traded currency.
“Reflecting the emergence of a new global economic order, economists are discussing not whether but when the mainland currency, the renminbi, will become an international currency, and perhaps even in the longer run, a reserve currency,” he said. “As China’s most important international financial centre, the internationalization of the renminbi is an area that will be vitally important to Hong Kong.”
Hong Kong’s renminbi bond market has been “a particularly dynamic growth area,” Tsang said.
“So far, there have been a total of 16 renminbi bond issues in Hong Kong,” he said. Most of these “have been well over-subscribed, indicating strong demand from investors both locally and overseas.”