Transcript of remarks by FS at media session (with photo/video)
Reporter: Mr Chan, what is the economic forecast and your prediction for the property market for the latter half of this year?
Financial Secretary: The economic outlook this year is better than what we have envisaged previously. When I prepared the budget, we gave a GDP growth (forecast) of about two to three per cent. The first quarter economic growth this year is about 4.3 per cent, the second quarter, although the growth is in a slower pace but the positive momentum carried. On the employment front, basically it is full employment situation, unemployment rate is just 3.1 per cent. On consumption, although there was a decrease in consumption in the beginning few months of the year, we have seen that it is coming back, I mean the consumption expenditure is coming back and starts to pick up a little bit.
From a bigger picture, if we look around Mainland China economic growth for the first half of this year is 6.9 per cent, better than the expectation of 6.5 (per cent). The economic growth of the US is quite good, for Europe and Japan, although they have been growing in a much slower pace, it is comparatively much better than expected. So we expect barring unforeseen circumstances, we will be able to adjust upwards our economic forecast for this year but the exact magnitude will need to be announced in August after we have the opportunity to review the most up-to-date figures.
On the property market front, the increase in property price has been slowing down since April and lately in the secondary market, we observed some softening in the price level. I just like to reiterate that in making your purchase decision, please do be prudent and careful, because on the one hand, supply in the coming, I mean supply of residential flats in the coming years, it will be at a high level.
According to the figures released by the Transport and Housing Bureau, as of March, end of March, the potential supply of private residential flats was in the order of about 96 000. The figure for the end of June will be published towards the end of this month, but my guess is that this figure will probably maintain, there is also opportunity to see a slightly higher supply situation.
And in terms of land supply, residential land supply for the first half of this year, the total figure is about 16 000, as compared to the whole year target of 18 000, so this year exceeding target in terms of private land supply is obvious.
On the completion front, in the coming five years, it is estimated that annual completion will be in the order of 20 300 units, which is about 70 per cent higher than the average for the past five years. For the past five years, the average completion was in the order of 11 700.
On the interest rate front, I think it is quite obvious that the direction of the future interest rate is going up, although the pace of increase would very much depend on the situation in the US. The US interest rate normalisation and the normalisation of their balance sheet is going to continue, I mean interest rate normalisation will continue, and normalisation of the balance sheet will happen this year. Both will have a negative impact in terms of money supply. In that case, the capital flow from Hong Kong to the US could happen, lately Hong Kong dollar has been on the weak end of the guarantee range. So, all these indicate that interest rate is going to go up, the pace although is unknown, it could be fast. One has to be very careful about one's repayment ability when one considers buying property at this juncture.
(Please also refer to the Chinese portion of the transcript.)
Ends/Saturday, July 22, 2017
Issued at HKT 16:05
Issued at HKT 16:05