Hong Kong throngs defy efforts to cool housing market
Snaking queues of thousands of prospective apartment buyers in Hong Kong signalled authorities have made no progress in cooling a red-hot property market, where prices are at records.
People were lining up last Friday and over the weekend at Victoria Skye, a luxury project at the former airport site of Kai Tak, and at the Ocean Pride development by Cheung Kong Property Holdings Ltd. and MTR Corp.
"Successive moves by the government in recent memory to cool the property market only resulted in it becoming crazier," The Standard newspaper said in an editorial on Monday. "The result is a sea of madness."
The Hong Kong Monetary Authority has been tightening rules for lenders, including restricting levels of lending to developers, as it tries to limit financial risks and take some of the heat out of the market. The Centaline Property Centa-City Leading Index of existing homes has advanced 23pc in the past year, setting new price records week after week. At a Legislative Council meeting on Monday, HKMA Chief Executive Norman Chan said levels of demand were reminiscent of 20 years ago - before Hong Kong suffered a property bust - and he expressed concern that people with limited financial resources were buying just because they thought prices would only keep going up.
In 1997, the Asian financial crisis touched off a six-year property bust in Hong Kong that shaved more than two-thirds off prices and saddled the city with a stagnant economy and deflation. Now as Hong Kong gets ready to celebrate the 20th anniversary of its handover to China, prices are at all-time highs. Between 2003 and 2015, inflation-adjusted prices for apartments multiplied almost four times, according to a study by Peter Richmond and Bertrand M. Roehner, published last month in the Evolutionary and Institutional Economics Review. Prices have risen 15pc since the beginning of 2016.
In the first five months of this year 8,616 homes were sold, already more than were sold in any first half since new purchasing rules were introduced in 2013, the Hong Kong Economic Times reported.
K&K Property has offered an additional 200 units at Victoria Skye after it sold 306 flats on Saturday, Ming Pao newspaper reported. Cheung Kong will put another 346 up for grabs after selling 496 in a single day (May 26), it said. The Hang Seng Properties Index of developers rose as much as 1.2pc on Monday, up more than 20pc this year.