Fraud suspected in sudden sales spike of $10m Hong Kong flats

Regulators loosened mortgage rules in October, which is only enough for small-to-medium flats.

A jump in the number of Hong Kong flats selling for exactly $10m in recent months has raised suspicions about potential fraud, following a relaxation of mortgage rules for properties sold at that price.

Regulators loosened rules in October, allowing buyers to borrow up to 80% on properties worth $10m or less versus $6m previously, but still only enough for small-to-medium flats in one of the world’s most expensive markets.

For properties priced above $10m, a 50% down payment is still required.

Data from realtor Ricacorp shows the number of home transactions priced at exactly $10m rose in March and April to 61 and 70, respectively, from usually fewer than 40.

Property and mortgage agents said sellers, under pressure to offload flats as the recession weighs on prices, could be open to helping buyers get higher financing ratios by declaring a lower transaction price and settling the rest separately.

Here’s more from Reuters.