Hong Kong Chief Executive Leung Chun-ying said he will take measures to curb property speculation, underscoring concerns that a bubble is forming after home prices gained more than 10 percent this year.
The government will seek to prevent “over-expansion” of bank credit to “ensure the healthy development of the residential market,” according to a transcript on the government’s website of Leung’s comments at a public event yesterday.
Home prices have recovered from a decline in the second half of last year even as the government lowered its growth forecast for 2012 and as the Chinese economy slows down. Leung took office in July after having pledged to boost housing supply to bridge a widening wealth gap and rein in property prices that have gained more than 80 percent since early 2009.
“He’s sending a message to the market that the government can still act when things get out of control,” said Buggle Lau, chief analyst at Midland Holdings Ltd., Hong Kong’s biggest publicly traded realtor. “Since he took over, there has been some expectation that he won’t be as aggressive or would wait until next year to introduce measures to curb prices.”
Since taking office, Leung has said he would stick to his commitment to restart a subsidized housing program halted in 2004.
Leung will delay his first policy address until mid-January, the government said this month.
The Hang Seng Property Index, which tracks the city’s seven-biggest builders, rose 0.1 percent as of 11:49 a.m. local time. It has gained 18 percent this year, compared with the 9 percent increase in the benchmark Hang Seng Index.
The government cut its estimate for full-year growth to 1 percent to 2 percent from a previous 1 percent to 3 percent this month after saying the economy contracted 0.1 percent in the second quarter from the first three months.
Home prices have been underpinned by low interest rates and an influx of mainland Chinese buyers, who made up 36.8 percent of all new sales by value in the first quarter, down from 37.9 percent in the previous three months, according to Midland. The proportion reached 53.9 percent in the third quarter last year, the realtor said.
Savills Plc said Hong Kong is the world’s costliest place to buy an apartment, with prices about 85 percent higher than in London, where the property broker is based.