IMF Warns about Upcoming Hong Kong Real Estate Price Correction

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.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza