Hong Kong Govt Won't Intervene in Property Market

The Hong Kong government said Monday it has no intention of introducing further measures to halt falling property prices, despite calls by politicians and homeowners to rescue the sector.

"The government's policy is to allow the private residential property market to operate freely," Dominic Wong, housing secretary, told legislators.

"As the market is now generally stable, there is no need for any further measures to be taken by the government," he said.

Wong's remarks came after some 2,000 Hong Kong homeowners took to the streets Sunday in an unprecedented march organized by the pro-business Liberal Party to protest over the slumping property market, a major part of Hong Kong's economy.

Wong told legislators the Hong Kong Monetary Authority had no intention of relaxing the 70 per cent loan-to-value ratio guideline for property mortgages.

"The guideline has proved to be very effective in reducing the credit risk faced by banks, assuring the quality of banks' mortgage loan assets and enhancing the stability of the banking system as a whole," he said.

Asked about the call for government to restrict land sales, Wong said the present programme to dispose of land for housing development through scheduled sales by auction, tender or application has been functioning effectively.

"Recent sales of land confirm that there is market demand and positive response to existing arrangements," said Wong, adding "the administration has no intention at present of altering the programme but will continue to closely monitor market developments."

Wong also said the government had no intention at present of stopping the home ownership scheme, which assists low income families to purchase subsidized public flats.

The property market, a pillar of the Hong Kong economy, has plunged by about 50 per cent since the Asian financial crisis started in 1997. It showed signs of improvement early this year but fell back into the doldrums after interest rate hikes.

The government earlier this month made efforts to ease the slump by deciding to lease publicly-subsidized flats instead of selling them and by increasing loans to home buyers.

But the Liberal Party said these measures were not enough, and urged the government to restrict land sales and relax mortgage ceiling restrictions in order to revive the property market.



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