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Thread: IMF warns Hong Kong property faces price correction

  1. #1
    Join Date
    Mar 2012

    Default IMF warns Hong Kong property faces price correction

    Watch out guys, better be prepared if the music stops

    HONG KONG - The International Monetary Fund on Wednesday warned that Hong Kong could see an abrupt fall in property prices
    after years of dramatic increases in one of the world's most expensive housing markets.

    Home prices in the Asian financial hub have skyrocketed 90 per cent since 2009 due to an influx of wealthy mainland Chinese buyers,
    pushing home-ownership beyond the reach of many of its seven million people.

    "The sharp run-up in house prices raises the risk of an abrupt correction," the IMF said in its annual review of Hong Kong's economy.

    "A sharp price correction would lead to falling collateral values and negative wealth effects, which could trigger an adverse feedback
    loop between economy activity, bank lending, and the property market.

    "The property sector is the main source of domestic economic risk," the Washington-based organisation said.

    It however said the chances of a price correction that is large enough to generate a major macroeconomic and financial consequences is
    "fairly low in the near term".

    It also said the city's government recent bid to slap new taxes on residential properties "should help dampen housing demand" but urged
    Hong Kong to ensure sufficient supply in order to boost home affordability.
    Hong Kong announced a 15-per cent stamp duty on non-permanent residents and corporate buyers as well as a higher stamp duty on the
    resale of property within three years in late October in an attempt to rein in soaring prices.

    With the global economic weakness continuing to impact domestic economy, the IMF said it expects Hong Kong's economy to grow
    1.25 per cent this year, before rebounding to 3 per cent next year.

    Hong Kong leader Leung Chun-ying had warned last week that the city needed to boost its housing supply and create more living space or
    risked losing its "best and the brightest" talents. - AFP

  2. #2
    Join Date
    Feb 2011


    yawn ....
    Ride at your own risk !!!

  3. #3
    Join Date
    Jul 2011


    Why did they single out HK?
    Why must they caution people?
    How do they know that it is going to drop?

  4. #4
    Join Date
    Oct 2012


    How come IMF advices HK to push up housing supply when the it forecast price correction? I thought increasing supply makes price even lower?

    Economic is really not an easy to understand..

  5. #5
    Join Date
    Apr 2010


    Smart Mahathir dont give a damn to IMF advice and ride through the financial crisis. Suharto listened to IMF, ended up lose power, whole country in deep s***

  6. #6
    Join Date
    Apr 2009


    Is IMF trying to drive some of the mainlanders to Singapore?

  7. #7
    Join Date
    Aug 2009


    Being neutral & reading the article, it brings up good point about rapid rise in property prices due to external source of funds (mainland Chinese in HK's case) which will eventually lead to a massive correction.

    Quite similar situation in SG. Better be prudent investing these days. Or sell now and recognise profit rather just paper value increase... IMHO.

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