Saturday , May 26 2018

Hong Kong Housing burden grows as home prices soar

Residential buildings stand at the Tsz Man Estate, a public housing estate developed by the Hong Kong Housing Authority, in the Tsz Wan Shan area of Hong Kong, China, on Saturday, April 29, 2017. Hong Kong, a city of soaring skyscrapers and glittering luxury boutiques, has become perhaps the epitome of income inequality in the developed world. The struggle to help its citizens improve their lives may represent the greatest challenge to its unique economic model. Photographer: Billy H.C. Kwok/Bloomberg


Living in the world’s most-expensive property market means having to set aside more than half your income as mortgage payments. Hong Kong’s mortgage-payment-to-income ratio rose to 54.2 percent in June, the highest since 1998, figures from Centaline Property Agency show.
The low affordability is a result of the steep rise in home prices, which have kept soaring despite efforts by the city’s leaders to impose restrictions to cool the market. A gauge of existing home prices, Centaline Property’s Centa-City Leading Index, broke previous records Friday to reach 160.3. The index has climbed 11 percent this year and has surged more than 50 percent in the past five years.
Debt-to-income ratios have surged in Hong Kong despite the fact that borrowing costs are far lower now than they were two decades ago, with average mortgage rates that are less than half the level of 1998.
As the Federal Reserve follows on its path
of increasing interest rates and Hong Kong
follows suit, Hong
Kong Monetary Authority Chief Executive Norman Chan has urged potential homebuyers to consider the impact on mortgage payments.

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