Following on from a new record high price for a luxury apartment in Hong Kong last week, regulators have moved to slow things down in the ultra-high end of the market. Although the rest of the market is still suffering, a good proportion of the recent Chinese government stimulus money seems to be making it’s way into luxury real estate in Hong Kong and fears of another bubble have prompted the cetral bank to up the deposit requirements for luxury property to 40%.
Anyone purchasing luxury property must now place at least 40% down. This move comes after fears from locals that mainland Chinese were in the process of pushing prices so high that local buyers would be priced out of the market. My thinking is that this will make absolutely zero difference. Chinese officials and business men spending government stimulus money are spending cash anyway, so a restriction of thius type will have no effect on these individuals.
Interest rates are still extremely low in Hong Kong and 2% is a typical mortgage rate. If they were serious about curbing prices, an increase in interest rates would be more appropriate. Similar worries are being felt in Australia, and the Western Australian government were prompted to hold an emergency meeting to discuss the latest credit induced property bubble that seems to be emerging there with property prices in Australia beginning to climb worryingly quickly, thanks to Chinese money once again.
