Price rise raises concern

       The International Monetary Fund said yesterday it shared the Hong Kong government's concern that the city could face sharp asset price inflation, as data showed home sale and purchase agreements nearly doubled in October.
       "We share the authorities' concerns that a credit-asset price cycle could take hold, leading to a sharp run-up in prices for certain real and financial assets,"the International Monetary Fund said in an annual report on Hong Kong.
       "While such asset price movements are part of the natural equilibrating mechanism of the Hong Kong economy, there is a risk that prices could become driven more by short-term liquidity conditions,divorced from fundamental forces of supply and demand."
       Government data yesterday showed that sale and purchase agreements, with stamp duty paid, for residential property units in the city soared 97% from a year earlier to 9,300. But they fell 24% from September, indicating the announcement of tighter mortgage lending rules may have dampened sentiment.
       The Washington-based IMF also said it had raised its GDP forecasts for Hong Kong following a recent improvement in the economy. It forecast a 2% decline in GDP this year, against a 3.5% decline previously, and 5%GDP growth in 2010,up from 3.5% previously.
       Hong Kong Chief Executive Donald Tsang warned last month of the risk of a property bubble and said the government could release more land for residential property development.
       "We welcome the consideration that is now being given to increasing the supply of land to the market as one of the possible means to help moderate potential property price surges," the IMF said.
       Property prices have surged by 28%overall this year, and price increases for luxury property have topped 40%, as wealthy mainland Chinese have snapped up luxury apartments. Last month, a luxury flat sold for a world record HK$71,280(US$9,200) per square foot.
       That prompted the central bank, the Hong Kong Monetary Authority, to raise the downpayment to buy luxury property and cap mortgage loans for mass-market property.