Hong Kong’s economy expanded for a fifth straight quarter, boosted by growth in China and elsewhere in Asia, the government said yesterday, while warning of the risk of a dangerous property bubble.
The territory said GDP expanded 1.4 percent in the second quarter from the previous quarter. GDP grew 2.4 percent in the first quarter.
The growth was due to stronger exports of goods and services, tourism boosted by Chinese visitors and recovery in Asian markets, Hong Kong Financial secretary John Tsang (曾俊華) told reporters.
Hong Kong, whose finance and export-reliant economy was battered by the global crisis, broke out of its year-long recession in the second quarter last year. The economy contracted by 2.7 percent last year.
Tsang said the government had raised its forecast for economic growth from 5 percent to 6 percent this year, from the 4 percent to 5 percent expansion predicted in May, but he also warned that uncertainty in Western economies continued to pose risks to Hong Kong.
“It is unclear whether the US economy can maintain growth momentum when the effects of various governmental stimulus measures fade away. In Europe, the sovereign debt crisis is not yet over,” he said. “So we must remain vigilant as the crisis plays out.”
“We remain determined in maintaining a strong economic recovery from the global financial crisis and in reducing the risk of a bubble forming in the property sector,” Tsang said.
He said the government would auction three extra sites on its latest application list in the remainder of the fiscal year ending March next year, regardless of whether developers table an offer.
Two of these three sites will be auctioned next month.
Under Hong Kong’s application list system, a land auction is triggered only when a developer offers at least 80 percent of the government’s minimum price for a lot on the list.
Tsang said the government would also convert some industrial sites into residential sites.
Norman Chan (陳德霖), chief executive of Hong Kong Monetary Authority, the city’s de facto central bank, warned property buyers that current interest rates are “extremely low, extremely abnormal.”
“This can’t last forever,” he told a separate press briefing.
Chan also warned banks that the credit risks they are facing in residential mortgages are on the rise and unveiled measures to help them cope with the problem.
These included lowering the loan-to-valuation ceiling to 60 percent for properties of HK$12 million (US$1.54 million) or more.
The loan-to-valuation ceiling for all non-owner-occupied residential mortgage would also be lowered to 60 percent, he said.
Chan added that the debt-to-income ratio, which reflects the ability of mortgage borrowers to repay loans, would be standardized at 50 percent.
The government also plans to introduce a stress test to ensure that when interest rates rise to more normal levels the borrower is able to continue servicing the debt, Chan said.
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