The sharp run-up in Hong Kong’s home prices raises the risk of an abrupt correction and the government should take further measures if necessary to contain the situation, the International Monetary Fund (IMF) said on Wednesday.
Hong Kong has one of the world’s most open economies and a property market that is easy to enter, making the city’s housing market a popular target for “hot money”.
Prices of homes in the former British colony have increased 20 percent this year, doubling from a trough in 2008 and driving the market beyond record 1997 levels. The surge forced the government to introduce new cooling measures in October.
The government’s efforts to ensure a steady and adequate supply of new housing including through public housing are welcome, although the impact may be limited in the short run given planning and construction lags, it said in a statement.
“Policies on a variety of fronts are needed to contain macroeconomic and financial risks from the housing market,” the IMF said, although it added that the likelihood of a correction big enough to cause major consequences was fairly low.
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