The swift bounce in Hong Kong property values would not last due to long-term pressures on the special administrative region��s wages and population growth, U.S. investment bank Morgan Stanley said Monday.

��The fundamentals for a strong property market (e.g., strong wage increases or population growth) are not here. If anything, the competitive pressure from Guangdong will continue to exert deflationary pressure on Hong Kong,�� said Andy Xie, Morgan Stanley chief regional economist of Asia-Pacific, according to Shenzhen Daily.

The recent bounce in Hong Kong property values was caused by a host of ��special�� factors including pent-up demand following SARS and the conflict in Iraq, along with historically low interest rates, Xie said.

The renowned economist��s remarks come in the wake of a strong government land auction last week and amid fresh worries Hong Kong may face a housing supply crunch in the next couple of years.

Last Tuesday, an urban residential land site was sold for HK$9.42 billion (US$1.20 billion) in a Hong Kong government land auction, well above analysts�� forecast the plot would fetch HK$6.67 billion.

On the same day, another piece of land was sold by the government at HK$4.7 billion, rising by 56.7 percent during the bidding.

The special administrative region might have to raise mortgage rates by 100 basis points in three months as the U.S. Federal Reserve keeped raising interest rates and China had refuted yuan revaluation rumors, Xie said.

Housing prices in Hong Kong have risen by about 25 percent so far this year.

Source: Shenzhen Daily/Agencies