Hong Kong - Regulators introduced measures Saturday aimed at curbing a rising bubble in Hong Kong's property market. The Hong Kong Mortgage Corporation said it is no longer offering mortgage insurance to people who buy homes as investment properties with large loans. The government-owned body said it is also cutting the insurance available for people buying their own homes.
The measures were introduced as the territory's housing minister, Eva Cheng, rejected moves for the government to start building homes for middle-income families, who are beginning to be priced out of the housing market.
She said Saturday that private developers rather than the government should build homes. Her comments followed speculation the government could resurrect its home-ownership scheme, which up until seven years ago allowed families to buy flats at subsidized prices.
Concern over soaring house prices has emerged after analysts warned Hong Kong is facing the same kind of property bubble that affected the territory in 1997.
The number of new flats on the market is the lowest in five years, which had led speculators and property investors to push up prices.
"Limited new supply and low interest rates encourage investors to enter the property market for investment," UBS AG property analyst Eric Wong said.
He predicted the bubble would burst in about six months after research by property agencies found home prices had risen by an average of 27.5 per cent since the beginning of this year.
Under the changes, insurance will no longer be available for mortgages that are more than 70 per cent of the value of the investment property.
People buying their own full-time homes with mortgages ranging from 70 per cent to 90 per cent of the property value will only be insured if the mortgage is below 12 million Hong Kong dollars (1.54 million US dollars), compared with 20 million Hong Kong dollars previously.
Those buyers who require 90- to 95-per-cent mortgages will see the insurance threshold lowered to 6 million Hong Kong dollars, compared with 8 million previously.
