Sir Hamish offers little to lift spirits of flagging market
Property SIR Hamish spoke at length on the property market, but provided little in the way of action.
Property developers had been hoping the Financial Secretary would signal relaxation of the recent interventionist stranglehold on the private sector housing market.
Sir Hamish extolled the virtues of free-market forces in the property sector, but announced no changes to the Government's now unpopular package of cooling measures announced last June aimed at driving speculators out of the housing market.
Having seen home sales and mortgage lending both slump to a two-year low in January, developers had been hoping Sir Hamish would provide something in his Budget that might kick start home buying by genuine end-users.
There were no tax-breaks for genuine first-time buyers, as some had hoped, and no suggestion that banks should now relax their strict 70 per cent maximum mortgage lending ceiling on ordinary flats.
In mid-January, Sir Hamish claimed prices of existing residential properties had fallen by an average 14 per cent from their peak in April, 1994.
However, developers and estate agents have cited a larger drop, closer to 20 or 30 per cent, particularly for apartments in new developments.
Michael Choi Ngai-min, president of the Society of Hong Kong Real Estate Agents, said now that the housing market had stabilised and speculators had been driven out, Sir Hamish should have suggested banks raised their mortgage lending ratios to around 80 per cent.
This, he said, would enable ordinary end-users struggling to save up for deposits to take advantage of lower prices.
Mr Choi said this would have little effect on speculators and encourage private home ownership.
In his speech, Sir Hamish heralded the work of the Government's special taskforce on property price stabilisation as a success.
He said: 'This easing of residential prices has gone some way to meeting the concerns of this Council and the community at large that the soaring property market of 1994 was driving prices beyond the reach of the average family.
'Nonetheless, this fall in prices should be kept in perspective. While prices have moderated, they remain at levels which are historically high.' Prices were still about 37 per cent higher than in January 1993 and clearly less affordable in relation to median household incomes than in earlier years, he said.
The Financial Secretary said additional measures to those announced last June had been considered, but were now not necessary and no further intervention was planned.
In the short-term, he said it was the Government's intention to squeeze out speculators, while in the long-term, it would tackle the problem at its roots by increasing the supply of flats.
'Beyond this, however, we must leave the housing market to find its own equilibrium,' he said.
As for office costs, Sir Hamish noted that last year Hong Kong had earned the dubious distinction of being labelled the most expensive business location in the world.
The office market has since remained tight in prime locations like Central, although average rentals have peaked.
He said in the medium-term, a new equilibrium would emerge as additional office supply became available.