‘This situation is rather unusual. Property market trends are hard to predict. I urge citizens to think twice before entering the property market, as the risk is higher now than ever,’ said Financial Secretary John Tsang.
‘The current market situation requires us to boost efforts in two respects. One is increasing land supply, the second is strengthening risk management in bank systems,’ he added.
The southern Chinese city has imposed new taxes and staged a series of land auctions in the past year and a half to boost supply and bring down prices.
Despite the earlier measures, some existing properties are still fetching top of the market prices with the home of France's top diplomat selling last month for HK$580 million.
A study by US consultancy Demographia in January found Hong Kong's home prices were the least affordable in the world.
The Hong Kong Monetary Authority last week told lenders to limit mortgages on properties worth more than HK$10 million to half their value, a cap which previously applied only from HK$12 million.
A 60% maximum loan to value ratio has been imposed on properties worth HK$7 to HK$10 million, down from HK$8 to HK$12 million.
Norman Chan, chief executive of the authority, said the changes were necessary to make the banking system more resilient and robust. ‘As the boom cycle in the property market continues to evolve, the risks associated with banks' mortgage lending business increase correspondingly. There is therefore a continuing need for banks to enhance their risk management,’ he explained.
However, some analysts believe that cooling measures are working. They point out that last week a sprawling residential site in Hong Kong’s mid levels district sold at auction for less than the sale price estimate.
But others point out that a smaller plot in the city's New Territories fetched a price at the higher end of estimates, suggesting officials still have work to do. Two previous land sales earlier this year sold at the top of market expectations, or surpassed pre-sale estimates.
Carrie Lam, the secretary for development, said that the government will release eight sites for sale in the coming three months to try cool the real estate market.
‘We have seen very heated transactions in the high end luxury houses. There's no reason for us not to continue selling land to meet this demand,’ Lam said.
The government will require developers to provide a minimum number of flats on some of the sites.
