Categorized | International

Hong Kong Banks Tightening Real Estate Credit

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Banks in Hong Kong are set to make a major impact on Hong Kong’s residential real estate market, as mortgage lending is set to become more stringent. Due to Chinese loan demand, and restrictions imposed by bank regulators, the banking industry looks to tighten credit that is reserved for the real estate sector.

Builders and developers and Hong Kong are reacting quickly to the expected changes. They have accelerated home sales, and may even issue new investment shares in order to combat the increasing credit costs. Such actions are important, as many developers may need to refinance in the next two years.

As developers look to rush home sales, there has been a large influx of new homes sold on the market. Pricing has thus become more competitive, and has declined more than fifty percent in the past year alone. Housing prices are expected to continue their decline until 2013, though the overall decrease is expected to be more gradual.

As mortgage-lending restrictions are tightened, it is believed that the number of transactions will decline. Homebuyers will be faced with higher required down payments.

The government and bank regulators believe that government intervention is necessary with respect to lending restrictions, as prices in Hong Kong have reached astronomical levels. The government is looking to avoid a housing bubble, and has opted to take matters into its own hands to correct the pricing nationwide.

Analysts believe that such drastic measures could have an indirect impact on other industries. While housing prices would be controlled, there may be unintended consequences that come as a result.

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About Nancy Raven

Nancy is the main writer for the International section of the website. Sometimes she also helps Drew out on the Finance/Mortgage section as well.

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