Saturday Dec 14, 2024
Saturday, 20 November 2010 00:01 - - {{hitsCtrl.values.hits}}
HONG KONG, (AFP) - The International Monetary Fund (IMF) has urged Hong Kong to work to rein in soaring property prices, but voiced support for the city’s currency being pegged to the US dollar.
The city should consider “raising stamp duties on housing and increasing the level of the rates (quarterly property tax) for higher-end properties (if prices continue to rise),” the IMF said in the latest annual report on Hong Kong’s economy published Thursday.
The IMF’s call comes amid fears of a property bubble in Hong Kong, a densely populated city of seven million that is famous for its sky-high residential rents and super-rich tycoons.
The soaring market has come despite a 0.5 percent hike in stamp duty on luxury property to 4.25 percent in April this year.
“Depending on the amplitude of the upswing, the resulting downturn could prove both protracted and painful,” the report said.
The government could also consider lowering loan-to-value ratios for a wider share of the property market and tightening the limits on debt service ratios, it added.
Hong Kong’s government has unveiled a host of measures aimed at damping down the property market, including holding land auctions to boost supply and tightening mortgage lending.
The measures appear to have curbed the volume of property transactions, but prime land still fetches giddy prices.
Earlier this month, the city’s biggest realtor, Centaline, recorded the highest commercial property price per square foot in Hong Kong’s history.
A 79th floor unit in The Centre -- a downtown skyscraper owned by Hong Kong’s richest man Li Ka-shing -- sold for 338 million Hong Kong dollars (44 million US dollars), or about 25,580 Hong Kong dollars a square foot, according to government data.
Luxury home values in the former British colony recently topped their pre-1997 Asian financial crisis peak, according to government data released in October.
Concerns have been amplified after a massive stimulus package was unveiled to kick-start the US economy, raising fears that a flood of speculative money could overheat Hong Kong’s volatile property market.
“As a result of the monetary expansion in the United States, the Hong Kong dollar monetary base has tripled over the past two years,” the report read.
But the IMF reiterated its support for the city’s currency system, which pegs the Hong Kong dollar to the US dollar.
“The Linked Exchange Rate System has shown itself to be a robust anchor of monetary and financial stability,” it said, “even in very difficult circumstances, and merits continued support.”Meanwhile, the IMF forecast Hong Kong’s economy will grow by 6.75 percent this year, before dropping to a rate of 5.0 to 5.5 percent growth next year.
Norman Chan, chief executive of the Hong Kong Monetary Authority, Hong Kong’s de facto central bank, said in a statement Thursday, “We are fully aware of the risks of an acceleration of the credit-fueled asset cycle.””We will monitor developments closely and introduce appropriate and timely prudential supervisory measures to ensure banking stability,” he added.