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LCQ19: Anti-property speculation measures

     Following is a question by the Hon Frederick Fung Kin-kee and a written reply by the Secretary for Transport and Housing, Ms Eva Cheng, in the Legislative Council today (December 21):


     It has been reported that the Financial Secretary indicated earlier during an overseas visit that the authorities might relax some of the anti-property speculation measures and take counter-cyclical measures to stabilise the property market if home prices extended their decline amid Europe's worsening credit crisis and a global economic slowdown.  Subsequently, the Secretary for Transport and Housing added that the authorities would, if necessary, consider reviewing earlier than scheduled the special stamp duties and the limits on loan-to-value ratios for mortgages.  The aforesaid remarks have aroused speculation in the market and among the public about whether the authorities will change the policy direction on regulating the property market.  In this connection, will the Government inform this Council:

(a) whether the authorities have reviewed if the aforesaid arrangement for disseminating information, including making possibly less-than-prudent remarks, will cause confusion in the market and enable speculators to profit from the information and speculations by further exacerbating market volatility; and

(b) given that apart from a shrinking turnover in the property market, home prices still remain at a high level at present, with the Private Domestic-Price Index (All Classes) compiled by the Rating and Valuation Department for October this year standing at 181.4, which is slightly lower than the peak of 188.1 in June this year, but still higher than the index of 172.9 in October 1997, whether the authorities can state clearly the circumstances under which the authorities will relax the anti-property speculation measures, and whether the price level and the home purchase affordability of members of the public are among the factors for consideration; of the anti-property speculation measures which the authorities consider relaxing; whether the earlier decision to resume the Home Ownership Scheme will be overturned for the purpose of stabilising the property market; and whether long-term strategies such as the development of land and the increase of land supply, etc. will be affected?



     The Government has been monitoring developments in the private residential property market closely and remains vigilant on the risks of a property bubble.  Since 2010, the Government has been responding to the situation through the introduction of long, medium and short-term measures in four areas, including increasing land supply, combating speculative activities, enhancing the transparency of property transactions, and preventing excessive expansion in mortgage lending, with a view to ensuring the healthy and stable development of the property market.

     Also, the Government has repeatedly reminded the public that an environment with abundant liquidity and ultra-low interest rates will not last forever, and flat prices will not keep going up endlessly.  The public should be mindful of the potential impact of increases in interest rate on the property market and should carefully assess the risks and their own financial ability when making a home purchase decision.

     The Financial Secretary (FS) reiterated the Government's position in respect of the property market when he was interviewed in South Africa, which was that the Government would, having regard to economic and market situation, introduce counter-cyclical measures to ensure the healthy and stable development of the property market.  FS did not mention the withdrawal of the Special Stamp Duty during the interview.

     Also, the Chief Executive made it clear on December 9, 2011 that the Government was committed to combating short term speculative activities to ensure the property market would remain healthy and stable.  The Government will review the measures as and when necessary, but the review mechanism will not be activated in the meantime.  The Government officials concerned only reiterated the Government's position all along.  Members of the public are advised not to over-react to "hearsay".

     The Government will continue to closely monitor the development of the property market.  In this regard, the Government will take into account all relevant factors, both internal and external, including the risk of a property bubble, the property market situation (in particular the situation of small and medium sized residential properties), speculative activities, market demand and supply, affordability of home purchase, local and external economic conditions, global liquidity and interest rates, and policies and measures taken by other economies which may have an adverse impact on the healthy and stable development of the local property market.

     In response to the aspirations of low and middle-income families for home purchase, the Chief Executive put forward two buffering measures in the 2011-12 Policy Address, including a new policy for the resumption of the Home Ownership Scheme (HOS) and enhancement of the My Home Purchase Plan (MHPP).  In respect of the New HOS, with the sites identified at this stage, we plan to provide more than 17 000 flats over four years from 2016-17 onwards, with an annual production of between 2 500 and 6 500 flats.  For the first year, 2 500 flats can be made available, which is expected to be ready for pre-sale in 2014 or 2015.  As more sites become available, we will set our planning target at 5 000 flats a year on average.  To be flexible, the actual number of flats to be built or put up for sale each year will depend on demand at the time.  The Hong Kong Housing Authority will work out the implementation details of the New HOS.  For MHPP, the Government will provide about 5 000 MHPP flats.  The first project at Tsing Yi will provide around 1 000 "no frills" small and medium flats.  These are expected to be completed in 2014 and applications for pre-letting will begin next year.

     We must emphasise that the New HOS and MHPP are both buffering measures.  In the long run, the Government will increase land supply to tackle the housing issue.  Our aim is to ensure an annual supply of land for an average of about 40 000 residential units of various types, including about 15 000 public rental housing units, 20 000 private residential units, and 5 000 New HOS flats.  When demand for land declines, land development will continue.  The newly developed land will be kept in the Government's land reserve and made available when appropriate.

Ends/Wednesday, December 21, 2011
Issued at HKT 12:27


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