HONG KONG (Reuters) - Hong Kong’s private home prices climbed to a fresh peak in August, hitting highs for the 10th month in a row and extending gains to a 17th month, prompting the head of de facto central bank to warn against the risk of an overheating property market.
Hong Kong private home prices climbed 10.3 percent during January-August this year, and soared 18 percent from the year-ago period, data compiled by the Rating and Valuation Department showed.
The prices rose 0.44 percent in August, compared with July’s 0.33 percent increase that reflected the slowest pace of growth in 17 months, data showed.
The head of the city’s de facto central bank, the Hong Kong Monetary Authority, struck a note of caution against homebuyers piling into the market.
“The risk of the property market overheating still exists,” Norman Chan, head of HKMA, told reporters.
“Right now we are at a very abnormal state with very low interest rates,” Chan said, adding that people should be prudent because their mortgage rates could rise if interest rates increase in the future.
The HKMA has introduced eight rounds of mortgage tightening measures since 2009 in hopes of cooling the red-hot housing market, but some homebuyers desperate to buy a flat before prices soar even more have instead turned to shadow lenders. [nL4N1JY46G]
The HKMA wrote in its Half-Yearly Monetary and Financial Stability Report on Thursday that home prices showed “signs of moderation” following the last round of measures announced in May, but said the residential property market outlook “remains highly uncertain” looking ahead.
Taming soaring home prices in the Asian financial hub is the top priority for the city’s new leader Carrie Lam, who is expected to address the issue in her maiden Policy Address next month.
Home ownership can be a distant dream for many in Hong Kong, one of the most expensive housing markets in the world, where a flat of less than 200 square feet can cost as much as $500,000.
While the government focuses on increasing land and primary housing supply, analysts say tightening measures such as high stamp duties have effectively locked up the supply in the secondary housing market.
Reporting by Venus Wu; Editing by Gopakumar Warrier