The Limited Times

Now you can see non-English news...

Family debt accounts for 90% of GDP, Hong Kong people can only be property slaves?

2021-06-10T21:10:34.903Z


The International Fund and Economic Organization (IMF) released a report on the stability of Hong Kong’s financial system on Tuesday (8th). It pointed out the risks that Hong Kong’s financial market may face, such as high ties with China, tensions between China and the United States, and


01 view

Written by: Commentary Editing Room

2021-06-10 17:40

Last update date: 2021-06-10 17:40

The International Fund and Economic Organization (IMF) released a report on the stability of Hong Kong's financial system on Tuesday (8th), pointing out a number of risks that Hong Kong's financial market may face, such as high ties with China, tensions between China and the United States, and even global markets and local risk sentiment Wait.

Among them, the issue of high property prices is also one of the main risks that the report is concerned about. The report pointed out that the debt of Hong Kong households is rising day by day. Although the situation is still manageable, once a serious crisis occurs, it may lead to a debt crisis for Hong Kong households.

The IMF report mentioned that the debt ratio of Hong Kong households, including residential mortgages, credit card debts and other investment-related debts, is increasing rapidly, from 51% of Hong Kong’s GDP in 2007 to 88% in the third quarter of 2020.

If non-bank loans (such as loans from consumer financial institutions and mortgage loans from developers) are added to the calculation, the debt-to-GDP ratio is more likely to increase by about 3% to 5%.

The situation is undoubtedly higher than the average household debt ratio of 72% in other developed economies, and the Bank of International Settlements (BIS) data shows that Hong Kong’s household debt to GDP ratio has grown at the highest rate among developed economies.

Local property prices have gradually risen, and Hong Kong people’s mortgages have become bigger and bigger. However, Hong Kong people are prepared to fight with savings. This is also the hardship of Hong Kong people's life.

As stated in the report, Hong Kong's high savings ratio and huge assets have alleviated the risk of rising household leverage.

As of last year, the average loan-to-value ratio (the ratio between the loan amount and the value of the collateral) of Hong Kong people was only 57%, and the mortgage payment to income ratio was only 37%.

The IMF believes that both are at a low level. It also points out that the quality of household mortgage credit remains stable under the macro-prudential policy adopted by the Hong Kong Monetary Authority.

As of last year, the average loan-to-value ratio (the ratio between the loan amount and the value of the collateral) of Hong Kong people was only 57%, and the mortgage payment to income ratio was only 37%.

(Profile picture)

Distorted housing supply, the government used the wrong medicine

The current living dilemma of the people is that some people are unable to get upstairs and can only hope that the property market will go down.

But on the other hand, low- and middle-income families have already taken huge debts to buy their homes, which means that under the disparity between the rich and the poor in Hong Kong, even if the property market plummets and the economy is depressed, the low- and middle-income families will suffer the most.

For example, the report also took the ten households with the lowest income as an example. It mentioned that once the interest rate increases by 3% and the income drops by 24%, the contribution ratio will rise to about 70%. By then, the group of citizens who are the most reluctant to get on the bus, Or will be unable to repay.

After all, there is a shortage of public housing in Hong Kong and the collapse of the HOS competition. In the past ten years, Hong Kong has only provided more than 14,000 public housing and HOS flats each year. However, the government has not prescribed the right remedy in urban planning at all. Instead, it has launched financial measures. Lam Cheng Plan" to increase the mortgage ceiling, lengthen the payment period of the citizens, and let the citizens borrow more money to buy more expensive flats.

Therefore, even if a low-probability "building explosion" does occur, then it will not only be the upper class suffering of society, but will be a financial crisis that will affect all sectors of society.

Can't be too fast, can't make room plan step by step

The increase in the proportion of household debts year-on-year is undoubtedly the result of the government's random investment in housing policies.

The government has forgotten the fundamental relationship between supply and demand and used financial means to quench thirst by drinking poison.

Under the long-term shortage of public housing and home ownership flats, this undoubtedly shows that Hong Kong people have almost no other housing options besides buying and renting flats with loans.

Housing is a daily necessities of the citizens. The government allows developers and owners to self-fertilize in terms of policies. In fact, they are squeezing the quality of life of low- and middle-income families and demanding their efforts to repay.

What the government now needs to face is the dilemma of building houses with caution and guarding against "building explosions" in property prices, but at the same time it has to deliver enough houses to respond to demand. The government must act cautiously.

The proportion of rental expenses has increased greatly. Who can understand the plight of the grassroots?

A lottery is either joy or sorrow for giving injections to the building

Public housing numbers re-create a new low-private housing ratio to reverse indefinitely

Hong Kong's household debt as a percentage of GDP

Source: hk1

All news articles on 2021-06-10

You may like

Trends 24h

News/Politics 2024-03-27T16:45:54.081Z

Latest

© Communities 2019 - Privacy

The information on this site is from external sources that are not under our control.
The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.