Last week, the Hong Kong government introduced a series of measures aimed at bringing the city’s real estate market down to earth.
The only problem is, in the short term it makes it even harder for the little guy. Poor little guy!
The first measure will see home buyers required to come up with a larger upfront payment for properties priced at HKD7 million or less.
Buyers now need to pay a 40 percent downpayment, up from 30 percent in the previous scheme, pricing many prospective first-time owners out of the market altogether, if they were even in it in the first place, that is.
Norman Chan, chief executive of the Hong Kong Monetary Authority, said, “This latest round of countercyclical measures will inevitably affect the home purchase plans of some people, including first-time buyers. However, it is the duty of the HKMA to undertake whatever supervisory measures are necessary to safeguard banking and financial stability as and when the property cycle evolves.”
The second stipulation will see mortgage rules for anyone looking to purchase a second property tightened.
According to Bloomberg, borrowers can now service their mortgages with a maximum of 40 percent of their income, down from 50 percent previously. The rule also applies to any properties that are not for personal use.
Hong Kong Monetary Authority stated that the measures will take effect immediately.
Over the weekend, Financial Secretary John Tsang faced a backlash for telling prospective buyers to self-assess their affordability in the latest in a string of insensitive remarks made by the Hong Kong government officials.
In Tsang’s own words in the interview with RTHK: “If it is not affordable, then don’t buy a property.”
Seems Tsang really missed his calling as a financial advisor.
In an annual survey of 378 cities conducted in the third quarter last year by US consultancy group Demographia, Hong Kong ranked dead last with respect to housing affordability, finding itself left in the dirt by London and Vancouver, as well as bitter Asia Pacific rival Singapore.
Ouch.
Photo: Wikipedia
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