〈Asian Post, June 10, 2017〉Home prices in Hong Kong could fall by 50 per cent in the next 10 years as a rapidly ageing population and increased supply of new flats will dent demand, according to a new report from Deutsche Bank.

"We expect vacancy rates to surge to 9 per cent, from 4 per cent now, and the average selling price to slide 48 per cent by 2026 from the current levels," said Deutsche Bank property analyst Jason Ching .

As the population ages, fewer households in the city would be able to stretch their mortgages to the maximum tenure of 30 years, the report said.

"We expect only 11.5 per cent of the total households to be able to afford an average private housing unit by 2019 from the current level of 16.9 per cent. Moreover, by factoring in upcoming rate hikes, we expect overall affordability to worsen and average selling price to decline by 48 per cent between 2017 and 2026 to restore the supply and demand equilibrium."

Deutsche Bank's forecast comes after Hong Kong's top financial officials issued their strongest warning yet to home buyers about escalating risks in residential prices.

Financial Secretary Paul Chan Mo-po said on Monday that "the risk in the property market is very high [and] sentiment in the property market is very exuberant".

However, Deutsche Bank's Ching's views have sparked a heated debate among those who widely expect home prices will continue to grow.

Vincent Cheung Kiu-cho, Colliers International's deputy managing director for Asia valuation, said Hong Kong's home prices were unlikely to decline by 50 per cent given the city's low unemployment rate and stable economic outlook.If Hong Kong home prices fall by 50 per cent then so will New York and TokyoVincent Cheung, Colliers International"As an international finance centre, if Hong Kong home prices fall by 50 per cent then so will New York and Tokyo," Cheung said.

〈The Standard, June 10, 2017〉The Hong Kong dollar strengthened against the British pound yesterday as the UK elections left no single party with a clear claim to power, sideswiping investors who had already weathered major risk events in the United States and Europe.

While Hongkongers will continue to take advantage of the weak pound for their travel, studies or even property purchases in the UK, the impact from the election was viewed as far less than that from last year's Brexit vote.

The Hong Kong dollar climbed to its strongest level since April 25 against the pound while firming up slightly against the greenback. Other Asian currencies such as the renminbi and Malaysia's ringgit also gained.

The pound's loss of 2 per cent against the US dollar in Asia and as much as 2.4 per cent in early European trade, reflected fears the political turmoil could delay and confound talks on leaving the European Union, which are due to start in less than two weeks.

Yields on 10-year gilts (UK government bonds) also fell 3 basis points to 1.00 per cent, although FTSE futures recouped early losses and turned 0.2 per cent higher, perhaps on hopes that a weaker pound would help the economy.The drop in sterling may not do much to school fees as the drop was not as drastic as a year ago during Brexit, which in some cases students saw students saving more than HK$40,000 in university tuition feesSamuel Chan Sze-ming, managing director, Britannia StudyLinkLast year's Brexit vote caused the pound to plunge by as much as 10 per cent in a single day and triggered a wave of outflows into Asia and into their currencies, including Hong Kong.

〈China Daily, June 9, 2017〉The Hong Kong Monetary Authority - the city's de facto central bank with the added responsibility of a banking regulator - has laid down further restrictive mortgage lending rules that have been widely sniffed at by developers and their agents as nothing more than window dressing.The Hong Kong Monetary Authority - the city's de facto central bank with the added responsibility of a banking regulator - has laid down further restrictive mortgage lending rules that have been widely sniffed at by developers and their agents as nothing more than window dressing.

But these rules, mild as they are, appear to have given banks an excuse to back away from the fierce fight for market share in the mortgage lending business before everyone gets a bloody nose and a black eye.

Nobody can remember, or cares about, who started the fight which has seen ever thinning mortgage loan margins offered by the combatants to woo homes buyers. Not anymore.

The two biggest lenders - HSBC and Bank of China (Hong Kong) - have widened the spreads of new mortgage loans, albeit by a tiny margin. Other banks, including Standard Chartered and the Bank of East Asia, have followed suit.

Although the increases are small, resulting in an extra monthly payment of about HK$200 for an average-size mortgage loan, the banks' message is clear. People who're obsessed with buying homes need to realize that the abnormally low borrowing costs that have helped fuel the property market frenzy in the past few years is fast becoming a thing of the past.

The market estimates there's an 80-percent chance of a further 25 basis-point rise in US interest rates at this month's meeting of the US Federal Reserve's policy committee. Hong Kong had kept its rates unchanged following the previous two US rate hikes.

Increased pressure on the exchange rate of the Hong Kong dollar against the greenback will make ignoring another US rate hike untenable. Doing so would spawn a fallout risk from sudden and massive rate surges in future to protect the linked exchange-rate system.

Some property agents are trying to calm homes buyers' nerves by insisting that the limited supply of new apartments will prevent a feared bubble burst. On the other hand, developers are offering zero-deposit mortgage loans through their finance company affiliates to prospective buyers in a rush to unload their stocks.

Obviously, they don't want to be saddled with piles of unsold homes if and when the bubble bursts. And, it could take nothing more than a rates hike to send the massively overheated market into a tailspin.

A residential building under construction at Kai Tak in Hong Kong. The city's homes prices have hit record highs after rising for the 13th straight month in April, according to recent report.

〈The Standard, June 8, 2017〉Home prices in Hong Kong in 2026 will be 48 percent less than what they are today, Deutsche Bank predicts.

It sees that happening as purchasing power will be limited by an aging population and there will also be an abundant supply of new residential units in the next few years.

The natural increase rate in population has already peaked, the bank notes in its study, and negative growth will be biting in 2027.

For example, 38 percent of the population was aged 25 to 44 in 1995. But people in that bracket will be 26 percent of the population in 2025.

In contrast, 22 percent of the population is currently aged over 60, and that will be 30 percent in 2025. Deutsche Bank says aging puts the housing market at risk as fewer people will be able to buy property.

But Terence Chong Tai-leung, an economics professor at the Chinese University of Hong Kong, disagrees with the thrust of the report, saying aid capital and arrivals from the mainland can support home buys and offset the negative population growth. And home prices are unlikely to plunge by half, Chong added.

Morgan Stanley meanwhile forecasts mortgage rates rising to 4 percent next year, which would likely cause a fall in home prices.

〈China Daily, June 8, 2017〉Michael Heng warns that sky-high costs will keep entrepreneurs away from Hong Kong; they must have their own space to thrive

Reindustrialization of Hong Kong appeals to many who prefer to work with their hands and walk around rather than be glued to a chair and desk. One huge hurdle standing in the way of realizing this attractive idea is the exorbitant rent on office space here. Moreover, as a result of the high cost of housing, most people live in matchbox homes. There is no garage startup when a garage costs HK$1 million upwards. Apple Computer would not have happened under the existing conditions.

The government has in the past tried to create technology centers. The Cyberport on Hong Kong Island and Science Park near Sha Tin were supposed to help local startup companies with subsidized office space and to transform the city into a technology hub. As it turned out,big companies ended up occupying the space. And they used the cheap office premises for low-value business activities such as storage and back-office work. At the same time, promising and genuine small startup entrepreneurs just cannot afford the time and lack the special skills to deal with the proverbial red tape.

The hardworking civil servants in charge were obviously ill-equipped to maximize the space’s utilization as originally envisioned. This is a classic case of unintended consequence of social actions — how an inspired program conceived at the top has the tendency to become pretty distorted in the process of implementation.

However, there is light at the end of the tunnel. In the past two years, following feedback on how under-utilized these technology centers had become, the Hong Kong government now requires research and development work as a pre-condition in application for these premises.