Cooling Measures expected to roll out in Hong Kong

Hong Kong monetary chief Norman Chan said more measures are possible to cool the city’s housing market as elevated household debt adds to risks from property- price gains over the past four years.

Debt is “near historic high levels,” Chan, the chief executive of the Hong Kong Monetary Authority, told lawmakers today, citing ratios of 58 percent to 59 percent of gross domestic product in the third and fourth quarters. In a housing and economic downturn, repayment may become more difficult, the official said.

Chan told reporters that the HKMA can roll out a sixth package of measures if necessary to rein in the property market after already using tools such as limits on mortgage terms. In October, the government added a tax on foreigners’ home purchases. Overheating in the housing market is the biggest risk to financial stability, Chan said, echoing a warning in December from the International Monetary Fund.

“If one believes that the housing market and the economy go in cycles,” household debt levels may rise further when a downturn comes, Chan said. That’s because “the economy will become more difficult and personal and household income will be negatively affected,” he said.

Bloomberg

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