The Hong Kong government plans to keep curbs on the housing market even after the value of home sales halved last month from a year earlier, Chief Executive Donald Tsang said.
“You can see a soft landing, which is quite nice, but we are not going to retract or retrench some of the measures we have taken,” Tsang said in an interview at Bloomberg LP’s head office in New York yesterday. “The market will not totally collapse. But over time, we’ll see a moderation in prices, which is exactly what we want.”
The value of housing transactions dropped 50 percent in October from the same month last year to HK$22.5 billion ($2.9 billion), after the government raised minimum down-payment requirements, boosted mortgage rates and increased land sales to curb a housing bubble. The estimated number of mortgages in which the outstanding debt exceeded the value of the home jumped to 1,653 at the end of the third quarter from 48 three months earlier, the Hong Kong Monetary Authority said Oct. 28.
“The measures we’ve taken as far as driving away speculators have been very effective,” said Tsang, 67, who will step down as chief executive in June. “If there’s a bubble in the market, the bubble is removed.”
The curbs came after property prices soared more than 70 percent since early 2009, fueled by record low mortgage rates, a shortage of new housing supply and an influx of buyers from other parts of China. Tens of thousands of demonstrators marched July 1, the 14th anniversary of Hong Kong’s return to Chinese rule, in part to protest escalating housing and rental costs.
The Hang Seng Property Index, which tracks the performance of the city’s seven biggest developers, rose 2.2 percent as of 9:47 a.m. in Hong Kong today. The gain cut its loss this year to 17 percent, compared with the 13 percent drop in the benchmark Hang Seng Index.
Sun Hung Kai Properties Ltd., the city’s biggest developer by value, climbed 2.3 percent to HK$108. Cheung Kong Holdings Ltd., the builder controlled by Li Ka-shing, Hong Kong’s richest man, advanced 1.9 percent to HK$97.50.
In his final policy address on Oct. 12, Tsang promised to provide more than 17,000 subsidized homes over four years starting in 2016. The government will also provide land for 20,000 private homes a year, and offer sweeteners including rental waivers and help with transport fares for the elderly.
Slower global economic growth will help stabilize housing prices, Tsang said in the interview.
“The world is not looking all that brilliantly at the moment, particularly in Europe and in the U.S.,” Tsang said. “We are in the long haul of slow growth. Hopefully this will give us a breathing space.”