Source : The Business Times, February 3, 2009
30% y-o-y drop in property prices expected by summer
(HONG KONG) The number of Hong Kong mortgages in negative equity quadrupled in the final months of last year as property prices tumbled, authorities said yesterday.
The estimated number of residential mortgages in negative equity - where the market value of the house is below the value of the bank loan taken out to buy it - jumped to 10,949 cases over the three months to December, from 2,568 cases in the third quarter, the Hong Kong Monetary Authority said.
The percentage of mortgage borrowers in negative equity increased from 0.5 per cent to 2.3 per cent, the figures showed.
The value of the problem loans rose to HK$24.8 billion (S$4.8 billion), up from HK$6 billion dollars in the third quarter.
The unsecured portion of the loans also increased to HK$2.7 billion from HK$400 million.
Demands for residential and commercial properties have fallen substantially on the back of job cuts. Hong Kong slipped into recession in the third quarter, according to government figures.
The number of negative equity cases remains far from Hong Kong's historic high of 106,000 in the second quarter of 2003.
At that time, the property market was still trying to recover ground after the 1997 Asian financial crisis, when Hong Kong was further hit by the outbreak of severe acute respiratory syndrome (Sars).
Hong Kong's property market has boomed since then with more and more luxury flats and houses rising up in the city's densely populated residential areas, sparking a flurry of speculation.
But the financial crisis has hit the city's top earners hard, with a knock-on effect to the city's luxury market.
Thousands of property agents have lost their jobs and some analysts are expecting a year-on-year drop in property prices of up to 30 per cent by next summer. -- AFP
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