Newspaper article International New York Times

A Market Hanging on One Number

Newspaper article International New York Times

A Market Hanging on One Number

Article excerpt

Most banks have yet to formulate mortgage policies beyond 2047, when an agreement guaranteeing the city a high degree of autonomy runs out.

To buy a tiny but coveted apartment in the vertiginous towers of South Horizons, a middle-class housing development overlooking the South China Sea in this city, the world's most expensive real estate market, would cost a family about a million United States dollars.

These modest homes on Ap Lei Chau, Cantonese for Duck Tongue Island, are a reason that a seemingly far-off date -- July 1, 2047 - - is in fact pressingly close in Hong Kong. Under the Sino-British Joint Declaration governing the British colony's return to Chinese rule on July 1, 1997, China agreed that Hong Kong would retain a high degree of autonomy, and its capitalist financial and legal system, for 50 years.

"The current social and economic systems in Hong Kong will remain unchanged, and so will the lifestyle," the Joint Declaration said.

A simple calculation shows the problem: After July 1, 2017, a 30- year home mortgage cannot be paid off before July 1, 2047, when the declaration runs out and China's promises expire along with it.

Hong Kong's housing prices are as high as its towers, and many people struggle just to afford a mortgage -- even the 30-year ones that banks increasingly offered as property prices rocketed over the past decade, said Lee Wing-tat, a former legislator and the chairman of Land Watch, a land and housing think tank.

"Now, if you do a 30-year mortgage arrangement, it's from 2016 to 2046 -- that's still O.K.," Mr. Lee said in an interview. But that could change, he said, predicting, "They will not lend out the money for a mortgage up to 2048."

News outlets in Hong Kong have reported that most banks have yet to formulate policies for beyond 2047, and calls for the Hong Kong and Chinese governments to address the problem are mounting.

Adam Harper, a spokesman for HSBC, the bank that was founded in Hong Kong in 1865 and prints most of the territory's money, said it "monitors market and economic conditions carefully."

Uncertainty is back, that bugbear of Hong Kong for decades amid the epochal changes surrounding the end of British colonial rule and today's tensions over China's plans for Hong Kong's political future, which some say are too like the Communist system that is widely disliked here. …

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