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Following is a question by the Hon Leung Kwok-hung and a reply by the Acting Secretary for Transport and Housing, Mr Yau Shing-mu, in the Legislative Council today (December 3):
Question:
Quite a number of members of the public have complained to me that as subsidized housing is in short supply, members of the public who are waiting to move in such housing are forced to rent private accommodation. However, despite the implementation of a series of measures by the Government in recent years to cool down the overheated property market, residential property prices still continue to rise which pushes up rentals continuously, causing members of the public enormous hardship. In this connection, will the Government inform this Council:
(1) of the respective expected numbers of public housing estates and Home Ownership Scheme courts which will be ready for intake within the coming nine months, and set out in a table their names, the districts in which they are located, the numbers of flats to be provided and intake dates;
(2) whether it will introduce new measures for cooling down the overheated property market within the coming six months to bring down residential property prices and rentals; if it will, of the details; if not, how the Government addresses the public demand for housing; and
(3) given the short supply of subsidized housing, whether the authorities will implement rent control measures again to make rented private accommodation affordable to members of the public; if they will, when they will introduce such measures; if not, what more effective measures the Government has in place to help members of the public rent private accommodation at reasonable rents?
Reply:
President,
Housing is an important livelihood issue which both the Government and the public are concerned about. The Government has been paying close attention to the trend of the private residential property market and remains highly vigilant on the risk of a property bubble.
To address the overheated property market, the Government has introduced several rounds of demand-side management measures, including Special Stamp Duty (SSD), Buyer's Stamp Duty (BSD) and doubled ad valorem stamp duty (DSD). These measures aim to combat speculative activities, ensure healthy and stable development of the property market, and accord priority to the home ownership needs of Hong Kong permanent residents in the midst of the present tight housing supply.
My reply to the three parts of the question raised by the Hon Leung Kwok-hung is as follows:
(1) The Housing Department will arrange in-take as soon as possible upon the completion of public rental housing (PRH) estates. In the coming nine months (i.e. December 2014 to August 2015), six PRH estates are expected to be completed, providing about 18 000 units. Details are at Annex. As various preparatory works, such as obtaining Completion Certificates and Occupation Permits after building inspections of the estates, are required to be completed during the period between completion of construction and in-take, the date of in-take and relevant arrangements are yet to be finalised. For the Home Ownership Scheme (HOS), the first batch of newly built HOS projects is under construction and is expected to be completed in 2016/17. These HOS projects are located in Sha Tin, Tsuen Wan, Tsing Yi and Yuen Long and will provide a total of 2 160 HOS flats. The Hong Kong Housing Authority (HA) plans to launch the pre-sale of these flats by end of this month (December 2014).
(2) Demand-side management measures help stabilise the residential property market, and are effective in combating short-term speculative activities and curbing external demands. Increase in property prices has been moderated since the introduction of DSD in February last year (i.e. 2013). For the first two months of 2013 (i.e. before the introduction of DSD), property prices increased by 2.7 per cent per month on average. From March 2013 to September 2014, the increase was 0.6 per cent
per month on average. Besides, stamp duty statistics from the Inland Revenue Department indicate that the number of short-term resale transactions (including confirmor transactions and resale within 24 months) remains at a low level in the third quarter of this year (i.e. 2014), with a monthly average of 84 cases, or 1.2 per cent of the total transactions. This represented a sharp decrease from the monthly average of 2 661 cases (or 20 per cent of the total transactions) during January to November 2010 (i.e. before the introduction of SSD). Also, purchases of residential property by non-local individuals and non-local companies stood at a monthly average of 126 cases, or only 1.7 per cent of the total transactions, in the third quarter of this year, markedly below the monthly average of 365 cases, from January to October 2012 (i.e. the before the introduction of BSD).
The demand-side management measures are extraordinary measures introduced under exceptional circumstances. We will continue to closely monitor the property market with reference to a series of indicators and review the situation at appropriate time. These indicators include property prices, affordability of the public, transaction volume, supply situation, ratio of mortgage or rental to income, etc., as well as changes in the local and external economic situations (e.g. the pace of adjusting or withdrawing the quantitative easing policies by the US or European countries, etc.). The Government has also undertaken to review the demand-side management measures one year after the passage of the relevant Amendment Bills that promulgated the demand-side management measures and report the outcome to the Legislative Council (LegCo). We understand that the crux of the problem lies with the inadequate supply of housing and land. The Government will therefore continue to adopt a two-pronged approach. On the one hand, we will adopt a supply-led strategy and continue to increase supply of land and housing to address the demand-supply imbalance problem at source in the long run. On the other hand, we will curb external and speculative demands as and when necessary to help stabilise the property market and prevent the adverse consequences arising from an overheated market.
It is worth pointing out that public support for the Government to develop new land and for the HA's housing production plan in districts is the key to resolve the supply issue. It is not possible for land and housing production programmes to have zero impact on the neighbourhood. The public needs to accept trade-offs in satisfying the housing needs of the community.
(3) There are views suggesting the Government to consider reintroducing tenancy control measures with a view to providing more protection to tenants, including restricting the rate of rent increase. As we have explained on different occasions, we are concerned that introducing additional regulation for the rental market hastily amidst the present tight housing supply situation may discourage landlords from renting out their premises, thereby reducing supply of flats. Also, landlords may charge a higher initial rent in order to minimise the impact arising from tenancy control measures in the future, thereby pushing up the rental level. This would probably bring additional burden to those grassroot tenants with imminent housing needs before they could benefit from the measures.
Tenancy control is highly controversial and there is as yet consensus in the community over this issue. The Government must act with caution and consider the impact of the measures on various stakeholders and the overall residential property market in a comprehensive manner. The Government has conducted a study into Hong Kong's past experience and overseas experience in implementing tenancy control and briefed the LegCo Panel on Housing in July this year. Empirical findings, both local and overseas, suggest an array of unintended effects that the implementation of tenancy control may bring about despite the good intention. Therefore, the Government considers that it would not be in the overall public interest to rush into implementing any tenancy control measures.
The Government believes that the problem of surging rent is caused by the serious demand-supply imbalance in housing. To this end, the Government will endeavour to increase housing supply, especially the supply of public housing. The Government will increase land supply through short, medium and long term measures, and strive to expedite the planning and construction procedures with a view to achieving the new supply target. At the same time, the Government will continue to pay close attention to the trend of the private residential rental market.
Ends/Wednesday, December 3, 2014
Issued at HKT 16:12
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