HKMA: Uncertain property market outlook

The HKMA issued a new quarterly report. The property price to income ratio rose to 16.4% in the previous quarter, up from 15.9% a year ago. The ratio of household debt to GDP also rose to a new high of 70.2%. The outlook for the future property market is still uncertain.

Property price to income ratio rose to 16%

The HKMA pointed out that the increase in property prices has accelerated since the fourth quarter, resulting in tighter home ownership affordability. The ratio of property prices to income in the previous quarter rose to 16.4%, higher than the 15.9% a year ago, and also higher than the 14.6% of the 1997 high. Income leverage ratio rose to 74.1%, much higher than the long-term average of about 50%. The ratio of household debt to GDP also rose from 68.2% in the second quarter of last year to 70.2% in the fourth quarter, a new high.

The bureau believes that the outlook for the property market remains uncertain. Although the economic environment is good, the market expects housing supply shortage, mortgage interest rates are low, and home ownership funds can be obtained from other financing channels, it may continue to support residential property demand in the short term, but market sentiment may be affected by fluctuations in the global financial market.

The interest rate on local mortgages will eventually increase. The Government will also make every effort to increase the supply of land and residential properties. The gap between supply and demand for housing may gradually narrow, which may ease the pressure of rising property prices in the long run.

With regard to Hong Kong exchanges, as the normalization of US monetary policy continues, the spread between Hong Kong and the United States will expand, and it is not ruled out that the Hong Kong dollar exchange guarantee will be triggered.