New flats to help restrain property prices
Updated: 2010-09-08 07:35
By Oswald Chen(HK Edition)
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A road sign stands against the backdrop of a residential block in western Kowloon, Hong Kong. Financial Secretary John Tsang said Tuesday the government plans to put 61,000 housing units on the market in the next three to four years. Daniel J. Groshong / Bloomberg News |
Analysts say govt measures could cool down housing market
The disclosure Tuesday by Financial Secretary John Tsang that 61,000 new apartments will be put on the market in the next three to four years may act as a mild restraint on soaring Hong Kong property prices, analysts say.
Compared with last year's supply of 7,000 apartments, property analysts agree that the new supply may be enough to both absorb market supply and pour a bit of cold water on the red hot property sector.
After plummeting from 31,000 new units in 2002 to only 7,000 in 2009, "the government can stabilize the local property market," Centaline Property Agency Research Associate Director Wong Leung Sing told China Daily.
Responding to questions from the media Tuesday in Beijing, Tsang reiterated that recent measures taken by the Hong Kong government to tackle soaring property prices will have a gradual effect on the market.
Since April of this year, the government has unveiled a slew of measures to calm skyrocketing property prices by boosting land supply and advising local banks to take prudent risk management measures and introducing practices to enhance the transparency of property transactions.
However, the local property market has continued to sizzle as local property developers continue to scramble for land.
On August 31, Kerry Properties grabbed the 1 Ede Road site in Kowloon Tong for HK$1.285 billion, which set a record price for the Kowloon peninsula. Three days later on September 3, the adjacent land plot at 3 & 5 Ede Road was triggered for sale with a minimum guaranteed bid of HK$1.053 billion.
Centaline's Wong said that in addition to boosting land supply, the acceleration of a land premium payment also helped to increase market supply.
"As the administration has expedited the land premium payment procedure, it can enhance flat supply. In the second quarter of 2010, the potential new flat supply due to land premium payment finalization has jumped to 13,000 units, which represents a 44.4 percent hike quarter-on-quarter," Wong said.
A land premium payment is required from local developers when they want to convert non-residential use of land into residential.
Wong added that the figure excludes future apartment supply arising from six land auctions that were held in previous months.
"The government's efforts in boosting residential supply can restrain swelling property prices to a certain extent. However, it is the ultra-low interest rate environment that boosts property prices. Therefore, if interest rates start to rise when the new flats are being introduced in the market, it may cause a severe downturn in property prices," Wong cautioned.
Wong also argued that the Hong Kong Monetary Authority's latest attempts to cool down the property market by asking local banks to raise the down payment on property purchases to 40 percent and conduct stress tests on those applying for mortgage loans are relatively more effective in curbing rising property prices.
China Daily
(HK Edition 09/08/2010 page2)