30 June 2014 - The Financial Secretary of Hong Kong, John Tsang Chun-wah, recently stated in his blog that due to the ongoing low interest rate environment and tight supply for commercial and residential properties, property prices have soared irrationally and have been showing “bubble-like conditions” over the past few years. The market generally believes that property prices will "only go up and not fall”. As a result, the HKMA has applied tightening rules for mortgage terms six times as well as government measures three times in recent years.
Mr. Tsang also stated that the non-residential property market has cooled down since the introduction of double stamp duty. The pace of price growth for office buildings, industrial buildings, and retail properties have shown signs of slowing down, while the pace of rental price growth has been stabilizing. The “tough measures” are helping to cool down the property market and in the current market environment, an easing of “tough measures” might reinvigorate the property market.
The sensitivity of property prices to government policy is high in Hong Kong according to Mr. Tsang. He hopes that legislators will accept the government's original DSD proposal in order to allow early implementation of measures to maintain a stable property market.