The Hong Kong Monetary Authority has warned banks in the territory over the rising risks of property lending, according to the Oriental Daily, as home prices notch up another record in the world’s most expensive housing market and Citigroup Inc sees an imminent round of new cooling measures.
The authority this week sent letters raising concern over the increasing number of highly leveraged mortgages provided by developers, which boosts risks for banks lending to these companies, according to the Daily and other media reports yesterday, citing unidentified people.
It might tighten risk management and banks should be prudent when lending to clients who buy multiple units with a single contract, the reports said.
Hong Kong’s property market is on a roll, stoking discontent among the territory’s residents and posing a headache for incoming Hong Kong chief executive Carrie Lam (林鄭月娥).
Existing home prices have risen to a record high for six consecutive weeks, according to the Centaline Property Agency Ltd (中原地產), shrugging off stamp duty increases from November last year.
Citigroup said in a note dated on Monday that it sees new tightening moves coming any Friday from now on.
Li Ka-shing (李嘉誠), Hong Kong’s richest man and the 88-year-old head of Cheung Kong Property Holdings Ltd (長江實業地產) and CK Hutchison Holdings Ltd (長和集團), last month said the rebound could persist for as long as two years as growing demand outweighs government curbs.
“I cannot see how property prices would fall in the coming one to two years,” he told an earnings news conference. “The force from buyers is very strong.”
Even with the US Federal Reserve raising interest rates, brokers and analysts in the territory also expect further increases in prices, but Citigroup is not so sure.
Home prices increasing at 2 percent to 3 percent a month is “clearly not an acceptable rate” for the government, the bank said in its note, and maintained its underweight rating on developers, with sell recommendations on several.
Hong Kong retained its position as the most expensive housing market among 406 major metropolitan regions in the annual Demographia International Housing Affordability Survey for the seventh year in a row.
The median price of a home last year was 18.1 times the median annual pretax household income, according to its Web site in January.