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In response to media enquiries on the objection raised by the real estate agents to the introduction of the demand-side management measures, a Government spokesman today (September 9) issued the following statement:
Increasing housing land supply has been the Government's top policy priority. In the light of the irrationally exuberant property market caused by the tight demand-supply balance, extremely low interest rates and abundant liquidity, the Government has introduced several rounds of demand-side management measures in November 2010 and October 2012 respectively to reduce the risk of a property bubble and prevent property prices from deviating further from the economic fundamentals. By doing so, we are seeking to help the community to avoid greater pain should there be any adjustment caused by a change in the interest rates or other external factors, and the same time achieve the policy to accord priority to address the home ownership needs of Hong Kong permanent residents (HKPRs) in the midst of the tight supply situation. Compared with the trough at the end of 2008, overall property prices increased by 134% in July 2013. As property prices have gone beyond the affordability of the general public, the mortgage payment to income ratio stood at as high as 56% in the second quarter of 2013, far exceeding the long-term average of 48% during the period between 1993 and 2012.
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 (SSD) and the Buyer's Stamp Duty (BSD). 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 0.4% per month during March to July 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 have been effective in addressing the irrational property market exuberance. We have also changed the irrational expectation that property prices could only go up further.
Reduction in property transactions from their record highs would inevitably affect the practitioners in the real estate sector. We hope the trade can understand that these are extraordinary measures in response to the exceptional market situation. By reducing the risk of a property bubble, the Government is acting in the overall interests of Hong Kong to maintain the stability of our financial system and macro economy. The Government will continue to adopt the supply-led strategy as the basis to address the housing situation at source.
It has almost been a year since the enhanced SSD and BSD were introduced. The Government has been listening carefully to suggestions from various sectors. We have proposed legislative amendments in response to feasible proposals such as refining the BSD refund mechanism for redevelopment projects. As regards suggestions related to exempting companies established by HKPRs or charitable organisations from the BSD, after very thorough examination, we are of the view that such exemptions would create loopholes which would seriously undermine the effectiveness of the BSD. As a matter of fact, under the mechanism proposed by the Government, HKPRs can choose to acquire residential properties in their personal capacity without having to pay the BSD. We would continue to explain the Government's position and to work closely with the Legislative Council, with a view to expediting the relevant legislative procedures to implement the demand-side management measures as early as possible.
Ends/Monday, September 9, 2013
Issued at HKT 21:48
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