Red hot

22 May 2017 By Lisa Jucca Follow @LJucca

The territory is trying yet again to cool a red-hot real estate market. New curbs will make home loans less profitable for banks and increase down payments for borrowers. An acute land shortage and Chinese buyers’ desire to diversify away from the yuan will limit the impact.

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The Hong Kong Monetary Authority, the territory’s de facto central bank, unveiled on May 19 a number of measures aimed at cooling an overheating property market.

For banks, the capital charges on mortgages will increase, with the "risk-weight floor" applied on new residential mortgages rising to 25 percent from 15 percent. The maximum loan-to-value ratios for mortgages for buyers with existing home loans will fall by 10 percentage points.

Hong Kong property prices hit a record high for the fifth month in a row in March, government data showed.

In November, Hong Kong raised stamp duty on homes to a flat 15 percent from a progressive rate of 1.5 percent to 8.5 percent. First-time buyers are exempt, and still pay significantly lower stamp duties.

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