Global inflation pressure expected to remain muted in near future
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The global inflationary pressure is expected to remain muted in the near future, partly reflecting slow economic recovery, Hong Kong's financial chief John Tsang said Wednesday.
Answering a question raised by a member of the Legislative Council in written form, Tsang, Financial Secretary of the Hong Kong Special Administrative Region (HKSAR) government, said the local year-on-year headline composite consumer price index inflation rate has remained subdued since mid-2009.
"Accommodative monetary conditions are appropriate given that Hong Kong is in the early stage of recovery," he said.
Tsang said that the loose monetary condition has been one of the factors contributing to the rising prices for high-end flats in Hong Kong but low mortgage interest rates kept housing affordability relatively stable.
Price of flats with an area of 160 square meters or above have already exceeded their previous peak recorded in the third quarter of 1997. The prices of individual high-end properties have surpassed their previous peaks in 1997 but prices of small and medium flats were still about 25 percent lower than the 1997 peak.
For a flat of 45 square meters in saleable area under a general mortgage term of 20 years, the mortgage repayment typically accounted for about 34 percent of the median household income of dwellers, much lower than the 93 percent at the peak in 1997. It was lower than the average level of 53 percent over the past two decades, too.
Tsang said the peg of the Hong Kong dollar to the U.S. currency, designed to achieve exchange stability rather than to target asset prices or consumer price inflation, was still the best for Hong Kong at present.
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