The Hong Kong Monetary Authority (HKMA) latest efforts to cool the property market seems to have failed. Driven by a supply shortage, low interest rates, and large inflows of money from mainland Chinese investors has seen house prices in the autonomous territory rise by more than 137 percent since the financial crisis in 2008.
Developers have reportedly sold 8,616 homes during the first five months of this year, which is greater than any similar period since the introduction of the new purchasing rules in 2013.
The Hong Kong Authority’s new measured included tighter lending rules that also restricting levels of lending to property developers. These measures have had very little effect and some analyst have been quoted as saying that these new measures have only added to the situation.
The new tighter lending criteria restricted bank lending, this then led to a gap in the market that has been filled by private finance companies. These companies funded 8.7 percent of all mortgages for new apartments completed in 2016. That figure is expected to rise to 15.5 percent for units that complete this year and is expected to rise even further as the year progresses.
Few analysts expect the authorities to take any further extreme measures. Raising tax levels for mainland buyers could lead to a triggering of a collapse in home prices in a real estate industry that accounts for 10 percent of Hong Kong’s economic output.
Any major upheaval in the property sector would be a disaster for the territory’s incoming leader, Carrie Lam, who has made affordable housing a top priority.