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In response to media enquiries on the introduction of demand-side management measures, a Government spokesman today (August 20) issued the following statement:
While increasing housing land supply has been the Government's top policy priority, the Government has introduced several rounds of demand-side management measures to manage demand in the midst of the tight supply situation. As a matter of fact, overall flat prices in June 2013 had surged by 132% over the recent trough in late 2008. Also, as the increase in flat prices was higher than income growth, the mortgage payment to income ratio worsened to 56% in the second quarter of 2013, exceeding the long term average of 48% over 1993-2012.
The demand-side management measures serve to address such an irrational exuberant property market caused by the tight demand-supply balance, extremely low interest rates and abundant liquidity, reduce the risk of a property bubble, prevent the property prices from deviating further from the economic fundamentals, and help the community to avoid greater pain should there be any adjustment caused by a change in the interest rates or other external factors. At the same time, it is also the policy to accord priority to address the home ownership needs of Hong Kong permanent residents in the midst of the tight supply situation.
The Government would like to emphasise that the Government's policy is to ensure the healthy and stable development of the property market and the overall macroeconomic and financial stability of Hong Kong. Property prices are affected by the demand and supply situation as well as other internal and external factors. The Government has all along reminded the public to act prudently in making home purchase decisions with reference to affordability.
In fact, the demand-side management measures have yielded notable results. Both speculative activities and purchases of residential properties by non-local individuals and non-local companies have diminished and stayed subdued since the respective introduction of the Special Stamp Duty in November 2010 and the Buyer's Stamp Duty in October 2012. The property market has also cooled off since the announcement of the latest round of demand-side management measures. Overall flat prices increased by on average 0.3% per month during March to June 2013, a notable deceleration from the monthly average increase of 2.7% in the first two months of 2013. The above shows that the relevant demand-side management measures are effective in addressing the irrational property market exuberance, and changed the irrational expectation that property prices could only go up further.
While the Government is determined to adopt the supply-led strategy as the basis to address the housing situation at source, the Government considers that the demand-side management measures are essential to ensure the healthy and stable development of the property market and the overall macroeconomic and financial stability of Hong Kong under the current exceptional circumstances. The Government will continue to closely collaborate with the Legislative Council to ensure that these measures are implemented in a timely manner.
Ends/Tuesday, August 20, 2013
Issued at HKT 22:16
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