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  1. #1
    Join Date
    Sep 2003
    High up above and deep down under

    Default Hong Kong raises required deposit on high-end property to 40pc

    Hong Kong raises required deposit on high-end property to 40pc

    Jonathan Cheng | October 26, 2009

    Article from: The Wall Street Journal
    CONCERNS about a growing bubble in Hong Kong's high-end property market pushed central bankers here to increase the required down payment on luxury homes to 40 per cent, from 30 per cent.
    Bubble risks: High rise buildings stand in the central district of Hong Kong. Picture: Bloomberg

    The new measure, which goes into effect immediately, applies to properties valued at $HK20 million ($2.8 million) or more, part of an attempt to tamp down an overheated sector that has alarmed regulators and set off a wave of populist anger.

    The Hong Kong Monetary Authority, the city's de facto central bank and main banking regulator, said that luxury-home prices already had exceeded Hong Kong's historical peak in prices, in 1997.

    While property prices in much of the rest of the world continue to languish, prices in traditionally volatile Hong Kong have been on a tear this year, thanks in large part to low interest rates and a wave of liquidity from mainland China, where Beijing last year unleashed a four trillion yuan ($636 billion) stimulus.

    Economists attribute much of Hong Kong's property run-up to mainland Chinese, and developers say that mainland Chinese customers now account for as much as 40 per cent of new home sales.
    Last week, one major local developer said it sold a luxury condominium to a mainland Chinese buyer for $HK71,280 per square foot, spurring fears that mainland Chinese buyers were pricing local home buyers out of the market.
    Hong Kong's top leader, Donald Tsang, said earlier this month that the very high end of the luxury property sector was separate from the mass market, but concerns have grown about the broader impact on ordinary home buyers.
    In issuing its new rules last Friday, the HKMA urged banks to be more prudent in valuing homes, and to assess whether borrowers would be able to repay their loans should interest rates rebound to "more normal levels".
    "There are no real problems in the overall property market, but the luxury residential sector is worrying," HKMA deputy chief executive Y.K. Choi said.
    One contributing factor is low interest rates in Hong Kong, where the local currency is pegged to the US dollar. Because lending rates are at a historic low, mortgages can be had for around 2 per cent these days, the HKMA said.
    So far, Hong Kong has managed to sidestep the troubles that beset the US subprime mortgage market, thanks to a 30 per cent down-payment requirement that has been in place since 1991.
    HKMA officials pointed to the US subprime meltdown to justify its higher down-payment requirement. "We want to get out ahead of any potential problems, instead of waiting until we have a full-blown crisis," Mr Choi said.
    The HKMA said it had no timetable for when the tightened restrictions might be lifted.
    "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx

  2. #2
    Join Date
    Sep 2009


    That's a large amount of money to put down as a deposit on a property! Forty percent is huge. Will these large amounts hlp Hong Kong stay ahead of potential problems or will it restrict the buyiing market a bit as not everyone could afford these large figures?

  3. #3
    Join Date
    Feb 2010
    Bangkok, Thailand


    Too cozy. As we all know, investors would love to have properties with affordable prices but with quality and all. This post has quality but doesn't have good news about the price.

  4. #4
    Join Date
    Sep 2008


    you've posted that twice

    and i still don't understand it

    do you mean "Sustainable growth"?

    substantial growth just means big growth...

    and big growth of what?
    have you defeated them?
    your demons


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